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ENERGYAustralian energyconsumption and

production

historical trends and projections to 2009-10

Shane Bush

Jane Harris

Luan Ho Trieu

ABARE RESEARCH REPORT 97.2

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© Commonwealth of Australia 1997

This work is copyright. The Copyright Act 1968 permits fair dealing forstudy, research, news reporting, criticism or review. Selected passages,tables or diagrams may be reproduced for such purposes providedacknowledgment of the source is included. Major extracts or the entiredocument may not be reproduced by any process without the writtenpermission of the Executive Director, ABARE.

ISSN 1037-8286ISBN 0 642 26601 8

Bush, S., Harris, J. and Ho Trieu, L. 1997, Australian Energy Consumptionand Production: Historical Trends and Projections to 2009-10, ABAREResearch Report 97.2, Canberra.

Australian Bureau of Agricultural and Resource EconomicsGPO Box 1563 Canberra 2601

Telephone (06) 272 2000 Facsimile (06) 272 2001Internet http://www.abare.gov.au

ABARE is a professionally independent government economic researchagency.

ABARE project 1171

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Foreword

The level of attention currently being focused on energy markets around theworld is unprecedented. Global environmental issues, particularly thoserelated to greenhouse gases, are at the forefront of international concern andthis position shows no signs of diminishing. As global pressure continues tobe applied to energy markets, this cannot but affect the environment underwhich the Australian domestic energy sector operates. This environment isalready in a state of flux to some extent anyway because of the general pushto deregulate energy markets and the incomplete knowledge about what theimpacts of this process will be. Other issues, such as resource access andinternational trade barriers, also continue to underlie the overall air ofuncertainty in the Australian energy sector at present.

In such an environment of uncertainty, a set of projections about futureenergy consumption and production is particularly timely. All participantsin the market — consumers, producers and governments — need reliableinformation on past trends in the energy sector, together with an independentassessment of the likely long term outlook. This independent assessment, tobe credible and valuable, must be based on the best available knowledge ofeconomic, political and technological factors. ABARE is committed tomeeting this need, and this report is the latest in a biennial series ofpublications on long term trends and projections for the whole energy sector.A key source of information is a comprehensive survey of the intentions ofmajor energy market participants.

The information in the report provides a valuable guide to the linkages betweenvarious parts of the energy sector in addition to considerable detail forparticular energy types, states and industries. The report also containsinformation on trends in energy efficiency and trends in greenhouse gasemissions from the energy sector. The data presented in the report are only aselection of those available. More detailed data on energy consumption andproduction, by industry, equipment type and state, are available from ABARE.

BRIAN S. FISHER

Executive Director

February 1997

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Acknowledgments

ABARE relies heavily on company responses to the biennial fuel andelectricity survey in the compilation of historical data and the preparation ofprojections. Without the assistance of these companies, information onenergy flows and end uses would be very limited. The cooperation of stateand private energy utilities in providing information is also gratefullyacknowledged.

The authors would also like to acknowledge the valuable contributions ofseveral of their ABARE and DPIE colleagues including: Kim Donaldson,Hong Shan, Leanne Holmes, Darren Kennedy, Alistair Stevenson, RobertCurtotti, Dr Mark Stevens and Stuart Beil.

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Contents

Summary 1

1 Introduction 101.1 Dealing with uncertainty 11

2 Australia’s energy sector – current situation andhistorical trends 142.1 Overview of current energy consumption 142.2 Trends in energy consumption since 1973 192.3 Trends in energy efficiency 222.4 Energy production, reserves and trade 252.5 Greenhouse gas emissions from the energy sector 27

3 Energy projections to 2009-10 303.1 Method and assumptions 303.2 Projected trends in energy consumption, by fuel 323.3 Projected trends in energy consumption, by sector

and state 403.4 Projected trends in energy consumption,

by equipment type 473.5 Projected trends in energy production and trade 483.6 Projected greenhouse gas emissions from the

energy sector 51

4 Concluding comments 54

AppendixesA Indicative energy content conversion factors 56B Comparisons of energy projections 59C Data sources 61D Projection models 67

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E Australian and New Zealand Standard Industrial Classification 74

F Indicative carbon dioxide content conversion factors 77

References 78

FiguresA Australian energy consumption, by state and fuel,

1995-96 16B Australian energy consumption, by sector and fuel,

1995-96 18C Australian energy intensity, by sector, 1994-95 19D Annual growth in energy consumption and GDP

in Australia 20E Australian energy consumption, by sector 21F Factors leading to changes in energy use 23G Australian energy consumption, by fuel 33H Australian natural gas consumption, by sector 35I Use of petroleum products in Australia 38J Australian electricity consumption, by sector 39K Australian energy consumption, by sector 40L Fuel use in thermal electricity generation in Australia 42M Transport sector fuel use in Australia 45N Australian energy consumption, by equipment type 47O Australian energy production, by fuel 49P Energy projections for Australia 59

Tables1 Total energy consumption, by fuel, 1995-96 142 Final energy consumption, by fuel, 1995-96 153 Energy consumption, by state, 1995-96 154 Energy consumption, by sector, 1995-96 175 Energy consumption growth, by fuel 206 Energy consumption growth, by sector 217 Components of changes in energy consumption,

1973-74 to 1994-95 23

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8 Sectoral contribution to energy intensity trends 249 Energy production, by fuel, 1995-96 2510 Australian identified recoverable resources of

energy minerals and fuels 2611 Australian energy trade, 1995-96 2712 Greenhouse gas emissions from the energy sector,

by industry and fuel type 2813 Economic and demographic assumptions 3114 Projected Australian energy consumption, by fuel 3215 Major energy projects in Australia, 1996–2010 3616 Projected Australian energy consumption, by sector 4117 Projected fuel inputs for thermal electricity

generation in Australia, by state 4318 Projected Australian energy production 4819 Projected Australian energy trade 4920 BRS projections of Australian crude oil and

condensate production 5121 Projected greenhouse gas emissions from the energy

sector, by industry and fuel type 5222 Energy content of solid fuels 5623 Energy content of liquid fuels 5724 Energy content of gaseous fuels 5825 Accuracy of projections of energy consumption 6026 Components of commercial vehicle fuel consumption 7327 Industrial classifications used in the study 7528 Carbon content and carbon dioxide emission factors 77

Statistical tables 80A Australian energy supply and disposal

A1 1973-74 84A2 1976-77 85A3 1979-80 86• •• •• •A18 2009-10 101

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B Energy consumption, by industryB1 Australia 102B2 New South Wales 103B3 Victoria 104B4 Queensland 105B5 Western Australia 106B6 South Australia 107B7 Tasmania 108B8 Northern Territory 109

C Energy consumption, by fuelC1 By industry 110C2 By equipment type 125

D Energy consumption, by fuel: energy unitsD1 Australia 131D2 New South Wales 133D3 Victoria 135D4 Queensland 137D5 Western Australia 139D6 South Australia 141D7 Tasmania 143D8 Northern Territory 145

E Energy consumption, by fuel: material unitsE1 Australia 146E2 New South Wales 148E3 Victoria 150E4 Queensland 152E5 Western Australia 154E6 South Australia 156E7 Tasmania 158E8 Northern Territory 160

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F Energy consumption, by fuelPetroleum productsF1 Australia 161F2 New South Wales 162F3 Victoria 163F4 Queensland 164F5 Western Australia 165F6 South Australia 166F7 Tasmania 167F8 Northern Territory 168

Other fuelsF9 Coal consumption, by state 169F10 Natural gas consumption, by state 170F11 Electricity consumption, by state 171

G Australian production of primary fuels: material units 172

H Australian energy imports and exports: material unitsH1 Imports 173H2 Exports 174

I Australian energy supply and trade, by fuel: energy unitsI1 1973-74 to 1985-86 175I2 1986-87 to 1997-98 176I2 1998-99 to 2009-10 177

J Australian petroleum supply and disposal 178

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Glossary

AbbreviationsABARE Australian Bureau of Agricultural and Resource Economics

ABS Australian Bureau of Statistics

ADO automotive diesel oil

AGA Australian Gas Association

ANZSIC Australian and New Zealand Standard Industrial Classification

BRS Bureau of Resource Sciences

BTCE Bureau of Transport and Communications Economics

DEST Department of the Environment, Sport and Territories

DPIE Department of Primary Industries and Energy

FOE fuel oil equivalent

GDP gross domestic product

IDF industrial diesel fuel

LNG liquefied natural gas

LPG liquefied petroleum gas

NGL natural gas liquids

N2O nitrous oxide

ORF other refinery feedstocks

CO carbon monoxide

CO2 carbon dioxide

CH4 methane

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UnitsThe units used in this report are joules (J), litres (L), tonnes (t), grams (g)and watt-hours (Wh), together with their multiples. Billion (b) means 1000million, and is used only in money quantities ($b).

Standard metric prefixes used in this report are:

kilo (k) = 103 (thousand)

mega (M) = 106 (million)

giga (G) = 109 (1000 million)

tera (T) = 1012

peta (P) = 1015

exa (E) = 1018

Standard conversions1 barrel = 158.987 L

1 kWh = 3600 kJ

Indicative conversion factors for fuel energy contents are given in appendixA and indicative CO2 emission factors in appendix F.

Conventions used in tables0.0 is used to denote a negligible amount.

Small discrepancies in totals are generally the result of the rounding ofcomponents.

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DefinitionsBagasse is the fibrous residue of the sugar cane milling process which isused as a fuel in sugar mills.

Coal byproducts include coke oven gas, blast furnace gas (collected fromsteelworks blast furnaces), coal tar, and benzene/toluene/xylene (BTX)feedstock. The last two are both collected from the coke making process.

Conversion is the process of transforming one form of energy into anotherbefore use. Energy consumed in conversion is the energy content of fuelconsumed by energy producing industries (such as natural gas and LPG usedin gas manufacturing, petroleum products used in oil refineries and all fuels,including electricity, used in power stations), plus the energy lost in theproduction, conversion and transport of fuels (such as electricity and naturalgas transmission losses and leakages, natural gas used in pipeline compres-sors, and energy lost in coke production), plus energy used in pumpedstorage, less the energy produced.

Derived fuels are produced from primary or other derived fuels byconversion processes to provide the energy forms commonly consumed.Derived fuels include petroleum products, thermal electricity, town gas,coke, coke oven gas, blast furnace gas and briquettes.

Emission factors are used to indicate the quantity of greenhouse gasesemitted from the combustion of a unit of fuel (measured in energy terms).For instance, if natural gas has a CO2 emission factor of 51.3 g CO2/MJ thenthe combustion of 100 PJ of natural gas will produce 5130 Gg of CO2 or5.13 million tonnes.

Greenhouse gases include carbon dioxide (CO2), water vapour, methane(CH4), nitrous oxide (N2O), carbon monoxide (CO), non-methane volatileorganic compounds (NMVOCs) and fluorocarbon (FC) species.

Natural gas includes commercial quality sales gas, liquefied natural gas,ethane, methane (including from coal mines, garbage tips and sewage plants)and plant and field use of non-commercial quality gas.

Oxidation, in the sense used here, is the process by which fuel is consumedby burning with oxygen. The proportion of fuel totally consumed by burningis referred to as the oxidised component, while a non-oxidised component

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will remain as products such as soot, ash or in the case of liquid and gasfuels, as non-oxidised liquid or gaseous components due to insufficientoxygen.

Petroleum products consist of crude oil and condensate used directly as fuel,liquefied petroleum gas, refined products used as fuels (aviation gasoline,automotive gasoline, power kerosene, aviation turbine fuel, lightingkerosene, heating oil, automotive diesel oil, industrial diesel fuel, fuel oil,refinery fuel and naphtha) and refined products used in non-fuel applications(solvents, lubricants, bitumen, waxes, petroleum coke for anode production,and specialised feedstocks).

Primary fuels are those forms of energy obtained directly from nature. Theyinclude non-renewable fuels such as black coal, brown coal, uranium, crudeoil and condensate, naturally occurring LPG, ethane and natural gas, andrenewable fuels such as wood, bagasse, hydroelectricity and solar energy.

Renewable gas consists of landfill (garbage tips) gas and sewage gas. Forthis report renewable gas has been included in natural gas.

Total energy consumption (also termed total domestic availability) is thetotal quantity, in energy units, of primary and derived fuels consumed lessthe quantity of derived fuels produced. If a derived fuel is exported fromAustralia, only the energy used in its production is included in total energyconsumption. Total energy consumption includes the consumption ofpetroleum in non-fuel uses.

Total final energy consumption is the total amount of energy consumedoutside the energy conversion sector. It is equal to total energy consumptionless energy consumed or lost in conversion, transmission and distribution.

Town gas includes all manufactured gases that are typically reticulated toconsumers. These include synthetic natural gas, reformed gas, temperedLPG and tempered natural gas.

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Summary

This report is a profile of the Australian energy sector, past, present andfuture. The future is a set of projections of energy consumption andproduction to the year 2009-10. The past is an historical perspective of trendsin energy markets since the early to mid-1970s. In addition, the provision ofstatistics on key issues — energy efficiency and greenhouse gas emissionsfrom the energy sector — should assist informed decision making. Allenergy types, all states and internal territories, and all main sectoral divisionsof the Australian energy market are covered in the report. It is a biennialpublication which continues a series produced by Commonwealth agenciessince the early 1970s.

ABARE’s projections are based on the best information that is currentlyavailable on the range of economic and technological factors which affectthe sector. More specifically, ABARE has at its disposal a unique, com-prehensive and rigorously formulated survey of energy market participants— the fuel and electricity survey. Much of the information behind theprojections comes from industry responses to this survey.

Energy in Australia – current and pastTotal energy consumption in 1995-96 is estimated to have grown by 3.0 percent to 4495 PJ, following an increase of 4.4 per cent in 1994-95.Consumption growth rates are currently above the long term trend (2.5 percent a year on average from 1973-74 to 1995-96) after a slowdown in theearly 1990s. Year to year fluctuations around the trend are stronglyinfluenced by rates of economic growth.

Crude oil currently accounts for 37 per cent of total energy consumption inAustralia, followed by black coal at 28 per cent. These two fuels alsoaccounted for the largest shares of total energy consumption over twentyyears ago. The most notable change in the pattern of energy use since theearly 1970s has been the growth in consumption of natural gas — at anaverage of 7.2 per cent a year, more than twice the rate for any other fuel.Growth in consumption of renewable energy has been below the rate forenergy as a whole, and it now accounts for 5.7 per cent of total energyconsumption, compared with 7.6 per cent in 1973-74.

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Key findings

• Total energy consumption in 1995-96 4495 PJ

projection for 2009-10 5987 PJ

• Contribution to total from black coal in 1995-96 28.3 per cent

projection for 2009-10 24.0 per cent

• Contribution to total from brown coal in 1995-96 11.6 per cent


• Contribution to total from petroleum productsin 1995-96 36.8 per cent


• Contribution to total from natural gas in 1995-96 17.6 per cent


• Contribution to total from renewable energy in 1995-96 5.7 per cent


• Energy consumption growth ratebetween 1973-74 and 1995-96 2.5 per cent

between 1995-96 and 2009-10 2.1 per cent

• Total energy production in 1995-96 10 877 PJ

projection for 2009-10 19 185 PJ



• Contribution to total from brown coal in 1995-96 4.8 per cent


• Contribution to total from crude oil and LPG in 1995-96 11.2 per cent




• Contribution to total from uranium in 1995-96 22.0 per cent


Energy consumption

Energy production


• Contribution to total from renewable energyin 1995-96 2.4 per cent


• Energy production growth ratebetween 1973-74 and 1995-96 6.0 per cent

between 1995-96 and 2009-10 4.1 per cent

• Total energy exports in 1995-96 7460 PJ

projection for 2009-10 14 854 PJ



• Contribution to total from oil in 1995-96 8.1 per cent




• Contribution to total from uranium exports in 1995-96 33.3 per cent


• Crude oil and petroleum product imports in 1995-96 1047 PJ

projection for 2009-10 1655 PJ

• Improvement in energy efficiency in Australia

over the period 1973-74 to 1994-95 14.1 per cent

• Improvement in the manufacturing sector 15.7 per cent(the largest sectoral gain)

• Greenhouse gas emissions from the energy sector in 1995-96 339 Mt

projection for 2009-10 428 Mt

• Growth rate between 1973-74 and 1995-96 2.4 per cent

projected growth rate between 1995-96 and 2009-10 1.7 per cent


Energy trade

Energy efficiency trends

Greenhouse gas emissions


Energy consumption is divided between end users and the conversion sector,with end users accounting for approximately two-thirds. Petroleum productsaccount for almost half of the energy consumed by end users, reflecting theheavy use of these products in the transport sector.

Electricity generation is the sector in which the most energy is consumed (27per cent of the total in 1995-96) followed closely by transport andmanufacturing (around 26 per cent each). These three sectors are significantlylarger in terms of energy consumption than the next biggest sector, residential,which accounted for 8 per cent of the total in 1995-96. The sectors exhibitingthe fastest growth in energy consumption since the early 1970s have beenmining (6.3 per cent) and electricity generation (4.0 per cent).

Over the past twenty or so years, energy efficiency (measured as energy usedper unit of output) has increased by an estimated 14.1 per cent. This wasdriven by a combination of technical (8.2 per cent) and fuel mix (5.9 percent) changes. Technical improvements included new technology, opera-tional procedures and energy conservation practices. The fuel mix changeof note was the increased use of natural gas and electricity at the expense ofpetroleum products.

In recent years energy efficiency gains have been more in line with the longterm trend (energy efficiency actually declined slightly in the late 1980s).The overall gain of 2.2 per cent over the three years to 1994-95 was mainlydriven by technical improvements. The manufacturing sector has made byfar the largest contribution to increased energy efficiency over the pasttwenty or so years, with an improvement of nearly 16 per cent. Othersignificant gains have been made in the transport and storage sector and theresidential sector.

Energy production in Australia in 1995-96 is estimated to have been 10 877PJ, an increase of 20 per cent in two years, mainly because of an 86 per centincrease in uranium production from the Ranger and Olympic Dam mines. Ifuranium is excluded, energy production increased by 9.5 per cent over the twoyears, mainly from increases in natural gas and black coal production.

Coal currently accounts for 53 per cent of energy produced in Australia,slightly down from its share of 57 per cent in 1973-74. Uranium, at 22 percent of Australian energy production, now follows coal, whereas in 1973-74crude oil was the second most important form of energy produced inAustralia.



Australia is a substantial net exporter of energy, with almost 69 per cent ofAustralian energy production in 1995-96 going overseas. The major energyexports are black coal and uranium with 53 per cent and 33 per cent sharesof total energy exports (in petajoules) respectively. Crude oil and petroleumproducts are the major energy imports. The most notable changes in tradepatterns over the recent past have been the increases in natural gas and crudeoil exports.

Compared with current rates of production, Australia has huge demonstratedreserves of energy, with the possible exception of oil. Whether or not thesereserves are ever developed will depend on factors such as their proximityto major markets, but generally speaking resource availability is unlikely tobe a constraint for the foreseeable future.

Greenhouse gas emissions from the consumption and production of energyin Australia are estimated to have been 339 million tonnes of carbon dioxideequivalent in 1995-96. The rate of growth has increased recently followinga slowdown in the early 1990s. This slowdown reflected slowing rates ofenergy consumption brought about by improvements in energy efficiency,fuel switching and slow economic growth. However, the subsequentincrease in greenhouse gas emissions parallels the increase in energyconsumption growth, meaning that consumption growth is offsetting otherfactors in determining emission growth rates at this stage. Emissionsincreased by 7 per cent over the two years to 1995-96, compared with anincrease of only 4 per cent in the four years to 1993-94.

Emissions are reported in two forms according to their origins — first interms of fuels and second in terms of activity. Of the fuels, coal productionand use accounted for an estimated 53 per cent of total emissions from theenergy sector in 1995-96, petroleum products for 28 per cent and natural gasfor 16 per cent. The activities that currently contribute most to energy sectorgreenhouse gas emissions are electricity generation (42 per cent), roadtransport (18 per cent) and industry (14 per cent).

Energy projections to 2009-10

Formulating long term projections is always complicated because manyfactors must be taken into account and there is a high degree of uncertaintyabout many of them, especially future policies, technologies and economicconditions. For the energy sector, there is particular uncertainty at present



about likely future policies to address climate change and other environ-mental issues.

Several sources of information and analysis are used in developing theprojections presented in this report: responses to ABARE’s biennial fuel andelectricity survey; announced intentions of major energy producers,consumers and investors; judgments supported by analysis within andoutside ABARE; and projection models. The major input is the informationcollected in the survey, which reflects energy consumers’ own expectationsabout the factors that will influence their energy use.

Total energy consumption in Australia is projected to grow at an averagerate of 2.1 per cent a year to 2009-10. The projected rate of growth is lessthan the average for the past twenty or so years (2.5 per cent) for a numberof reasons. Among other reasons, future growth will be from a substantiallylarger base level of consumption. And further improvements in energyefficiency are expected from technological change and policy and priceinduced changes in consumer behaviour.

Crude oil is expected to continue to account for the greatest share of totalenergy consumption in 2009-10, at 34 per cent, with automotive gasolinethe most important crude oil product used. However, natural gas con-sumption is expected to continue to grow strongly. The projected growthrate for this fuel is an average of 5.5 per cent a year, leading to a rise in itsshare of total energy consumption from under 18 per cent in 1995-96 toalmost 28 per cent in 2009-10.

Although the manufacturing sector is expected to continue to be the largestconsumer of natural gas, the electricity generation sector is projected toincrease its share of total gas consumption from 19 per cent to 27 per centover the period. This growth reflects the expectation that a substantialproportion of new incremental electricity generating capacity will be naturalgas fired.

The large projected increase in the use of natural gas for electricity generationis expected to be at the expense of black coal used for this purpose. Blackcoal consumption is projected to grow at only 0.8 per cent a year on averageto 2009-10, leading to a drop in its share of total energy consumption fromjust over 28 per cent to 24 per cent. Black coal is still expected to account forthe majority of the energy consumed in electricity generation (52 per cent in



2009-10) but natural gas is expected to increase its share from only 9 per centin 1995-96 to a projected 21 per cent in 2009-10.

On a sector by sector basis the overall pattern of energy consumption isexpected to remain broadly similar to that of the past twenty or so years.Projected energy consumption growth is strongest in the mining sector at3.9 per cent a year, although by 2009-10 this sector’s share of total energyconsumption is expected to be only 6.5 per cent.

The major energy consuming sectors in 2009-10 are expected to continue tobe conversion, transport and manufacturing. Of the total 5987 PJ of projectedenergy consumption in 2009-10, 29 per cent would be consumed by theconversion sector, which in turn is dominated by electricity generation.Electricity generation is expected to maintain its share of almost 26 per centof total energy consumption over the projection period. The manufacturingand transport sectors are also projected to each account for around 26 percent of total energy consumption in 2009-10.

On a state by state basis the exercise of projecting energy requirements andadditional increments of generating capacity is made more complex by thedevelopment of the national electricity grid. However, it appears reasonableto assume at this stage that electricity flows between states will be similarto levels over recent years, except between New South Wales and Queens-land because of the proposed link which has been projected to come onstream in 2001.

The fuels used in different equipment types generally reflect the uses towhich the equipment is put along with relative fuel prices. The largest singlecategory of end use device continues to be boilers (30 per cent of total energyconsumption in 1995-96, with 79 per cent of this used to produce steam forelectricity generation). Coal is used mainly as a boiler fuel, and in cokeovens. Natural gas is a more versatile fuel and can be used in most types ofenergy equipment. Petroleum products are used mainly in mobile andstationary engines where fewer fuel substitutes are available.

Total energy production in Australia is projected to increase at an averagerate of 4.1 per cent a year to 19 185 PJ in 2009-10. This projected growthrate is above that expected for energy consumption in Australia as energyexports are expected to grow strongly. Black coal and uranium are expectedto continue to dominate the pattern of both energy production and trade. In2009-10, black coal is projected to account for almost 39 per cent of




Australian energy production in energy terms, and 41 per cent of energyexports, while uranium will account for almost 37 per cent of energyproduction and 47 per cent of energy exports.

A feature of the outlook scenario is the strong projected growth in productionof natural gas, to meet both demand in the Australian market and growingdemand for LNG exports. Exports of LNG are projected to grow at anaverage rate of 7.7 per cent a year to 2009-10 assuming the continueddevelopment of new projects as detailed in the main report. Growth in exportdemand for both black coal and LNG will depend largely on Asian marketdevelopments.

Total greenhouse gas emissions from the Australian energy sector areprojected to be 428 million tonnes of carbon dioxide equivalent in 2009-10,a 26 per cent increase over the estimated level in 1995-96 (at an averagegrowth rate of 1.7 per cent a year) and a 40 per cent increase over the 1989-90 level. This reflects the projected 33 per cent increase in energy consump-tion over the projection period. Coal is projected to continue to account forthe bulk of the emissions, at 46 per cent in 2009-10. Petroleum products areexpected to account for 27 per cent and natural gas about 23 per cent.

Among the sectors, electricity generation accounts for by far the largestamount of emissions and this is expected to continue, based on the continueduse of black and brown coal as fuel inputs. Electricity generation is projectedto account for 41 per cent of emissions in 2009-10. The next two mostimportant sectors are road transport and industry, with projected shares of18 per cent and 16 per cent of greenhouse gas emissions respectively by theend of the projection period.

At this stage projected emissions are based on the Australian government’sinternational commitments under the United Nations Framework Con-vention on Climate Change. International greenhouse gas negotiations willcontinue throughout 1997 and in the leadup to the third Conference of theParties scheduled for Kyoto (Japan) in December 1997. Negotiations havenot reached international consensus on key issues, such as targets andtimetables, policies and measures, and ways to achieve equitably negotiatedoutcomes. The implications for Australia therefore remain uncertain, thoughthe adoption of severe uniform targets of the nature suggested to date bysome countries would result in significant economic and trade losses forAustralia. If significant additional measures are agreed and implemented,the projections contained in this report may require modification.


The projections of energy consumption and associated emissionsincorporate the estimated effects of policies already announced, particularlythe National Greenhouse Response Strategy and Greenhouse Challengewhich involves cooperative agreements with industry. The possible effectsof the introduction of further policies to achieve substantial greenhouse gasemission reductions are incorporated only to the extent that they haveaffected energy users’ long term expectations and their responses toABARE’s fuel and electricity survey.



Introduction

‘Energy under the spotlight’ was the theme of this report two years ago andsince then the glare of the spotlight has intensified. Probably the mostimportant reason for this is the continuing international attention onenvironmental issues, particularly greenhouse gas emissions, which haveconsequences for the domestic energy sector. There is increasing pressureto improve our energy efficiency at the industry level and this is unlikely toabate. There is also a growing interest in alternatives to traditional energyforms and methods of energy generation. At the same time the energy sectoris experiencing unprecedented changes stemming from microeconomicreform policies aimed at increasing competition in the energy sector, mostnotably in the electricity and natural gas industries. And there are theongoing issues of resource access and impediments to international trade inenergy. All of these are likely to be relevant to policy makers, producers andconsumers of energy and the community in general, well into the future.

When a sector is undergoing significant change, participants are keenlyinterested in obtaining information on what the future might hold. ABARE’scontribution is a set of energy projections based on the latest availableinformation, combined with an historical perspective. A good understandingof past and likely trends in the sector provides a valuable guide for decisionmaking on policy, investment, production and consumption. For example, adetailed understanding of where and how various fuels are used is importantwhen assessing environmental policy.

While projections for certain parts of the energy sector are published byvarious organisations, the projections presented in this biennial ABAREreport are the only completely balanced set which covers all energy types,all states and all sectors of the Australian economy. Their value is increasedby the fact that they are based on intended behaviour of energy marketparticipants.

In addition to detailed data on energy consumption, production and trade,this report contains information on two key issues:

• trends in energy efficiency; and

• trends in greenhouse gas emissions from the energy sector.

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ABARE research report 97.2


The data reported here are only a selection of what is available. More detaileddata on energy consumption, by industry, equipment type and state, areavailable from ABARE.

1.1 Dealing with uncertaintyWhen formulating any set of forecasts or projections it is necessary to makejudgments, or assumptions, about factors which by their nature are uncertain.This is particularly challenging for the energy sector at present. Furthercomplicating the unsettled international environment related to greenhouseissues, and the unsettled domestic environment caused by market reform, isthe current focus by the federal government on developing a new andcomprehensive energy policy for the future.

ABARE’s previous set of long term projections (Bush, Holmes and Ho Trieu1995) incorporated the likely effects of a number of ongoing policies underthe National Greenhouse Response Strategy (NGRS) and GreenhouseChallenge which had the aims of improving energy efficiency andencouraging the use of renewable and less environmentally damaging fuelsources (Commonwealth of Australia 1994). A program of cooperativeagreements with industry is a major part of these policies. The latest policyinitiative is a ‘Green Paper’ on sustainable energy policy for Australia witha twenty-five year perspective (Commonwealth of Australia 1996), whichwill be followed by a ‘White Paper’ when discussions with interested partiesare complete.

Despite the current flux in the policy making process, key elements of thegovernment’s policy framework appear unlikely to change at this stage.There is a commitment to a competitive energy sector which should providean opportunity for new technologies, such as renewable energy,cogeneration and energy efficiency services, to compete with conventionalenergy sources through reducing barriers to entry and opening up markets.At the same time, however, it is recognised that conventional energy willremain the major source of energy globally and for Australia for theforeseeable future and that this must be reflected in the policy process.

Another key policy element is the emphasis on ‘full social cost pricing, withthe main concern at this stage being the need to advance the state ofknowledge about how to implement such pricing, and the impacts that thismight have on the Australian economy as a whole and at a sectoral level(Commonwealth of Australia 1996).



The ways in which the possible effects of current and potential policies areincorporated into the projections are described in chapter 3. Essentially, theapproach is to incorporate the estimated effects of announced policy changesand to take into account the effects of possible policy changes only to theextent that these changes affect energy users’ long term expectations andintentions, as revealed in announcements and in their responses to ABARE’sbiennial survey of energy users (the fuel and electricity survey).

The process of opening up electricity and gas markets and making them morecompetitive is proceeding at the federal and state levels and the implicationsof this process have recently been analysed by ABARE (Melanie and Weston1995; Weston and Melanie 1996). There are many ways in which thesepolicies are likely to influence the energy sector over the long term: changesin electricity and natural gas prices could affect consumption and productionof both natural gas and electricity and competition between these two andother fuels; fuel choices for electricity generation could be affected; and thetiming and location of major projects such as investments in new pipelinesor new generation or cogeneration capacity could be affected.

As in the case of existing and potential environmental policies, wherepossible, assessments of the effects of market reforms are based on surveyresponses and announced intentions of major producers, consumers andinvestors. It is assumed that governments will maintain their commitmentto remove any barriers to competition and trade, and that major committedprojects such as new pipelines and power and cogeneration projects will goahead as planned.

A range of additional political, technological and economic factors couldinfluence long term trends in the energy sector. For example, in the oil andgas extraction industry, sustained technological change over a period of timehas resulted in increased access to reservoirs, increased technical recoveryof reserves, reduced costs of exploration, development and production, andreduced technical and economic risks (Hogan et al. 1996). But the future ofsuch processes is always somewhat uncertain.

More generally, a range of variables influence the broad trends in energyproduction and consumption. The most important of these are economicgrowth, population growth, the levels of key macroeconomic variables, andworld oil prices (see table 13 in chapter 3).



In general, energy prices are determined by the interaction of consumers andproducers on world markets, given prevailing government policies. Thisapplies for each of the different stages of the energy system, includingproduction, conversion and end use consumption. Important factors whichinfluence relative energy prices include the relative scarcity and extractioncosts of non-renewable energy resources, substitution options in energyconversion sectors (such as electricity generation) and the degree ofsubstitutability between the final energy forms in satisfying end use energyneeds (Hogan et al. 1996).

The assumptions which ABARE has made to cover the variables describedabove are set out in chapter 3, along with a description of the methods usedto formulate the projections.

The projections presented in this report are medium to long term in nature.Inevitably there will be short term fluctuations in both consumption andproduction, causing the actual outcome in any year to differ from theprojections. But this will not prevent the report from being useful for sometime to come if the long term trends themselves do not change significantly.The report provides a view of the whole energy sector, rather than detailedanalyses of particular energy markets or industries. More detailed analysesof particular parts of the energy sector, and also of the shorter term outlook,are provided in other ABARE publications.

An important point to make is that forecasts or projections are produced byABARE using the best available information, but the quality and quantityof information changes continually. In the future, as we have seen in the past,new risks may emerge that fundamentally change the conditions withinwhich the energy sector operates (Commonwealth of Australia 1996).Because one cannot see the future it is not accurate to describe the eventualoutcome as ‘correct’ or ‘incorrect’. Nevertheless there has been a great dealof general interest in ABARE’s projected versus actual outcomes for variouscommodities. Therefore, appendix B contains a comparison of energyprojections developed since 1981 by ABARE and its predecessors.

In the following chapter, the current energy situation in Australia and trendsover the past twenty-two years are described.



Australia’s energy sector – currentsituation and historical trends

2.1 Overview of current energy consumptionEnergy consumption growth has accelerated recently after a slowdown inthe early 1990s. Total energy consumption in Australia in 1995-96 isestimated to have been 4495 PJ, an increase of 7.5 per cent over the leveltwo years ago. Crude oil accounts for about 37 per cent of total energyconsumption, followed by black coal which accounts for 28 per cent (table1). Renewable energy has accounted for around 6 per cent of total energyconsumption over the past two years. Of the 4495 PJ, an estimated 1427 PJor 32 per cent is consumed by the energy conversion sector and the rest byend use sectors (tables A1–A18). End use sectors are those within whichfinal energy consumption is measured.

Petroleum products account for nearly 50 per cent of final energyconsumption, reflecting the heavy use of these products in the transportsector. The other major energy sources for end users are natural gas (20 percent) and electricity (18 per cent) (table 2). Renewables account for 6.6 percent of final energy consumption. Coal’s share is even less than this becauseits main use is in the conversion sector to generate electricity and as an inputinto coke ovens to produce coke for the iron and steel industry.

New South Wales and Victoria together account for nearly 57 per cent oftotal energy consumption in Australia (table 3), the same as two years ago.

14

2


1 Total energy consumption, by fuel, 1995-96

PJ %

Black coal 1272.9 28.3Brown coal 522.0 11.6Crude oil 1653.0 36.8Natural gas 788.9 17.6Renewables 258.3 5.7

Total 4495.0 100.0


State patterns of energy consumption reflect a variety of factors whichinclude population distribution, historical patterns of resource developmentand the location of major industries and natural resources. Energyconsumption per person also varies across the states. Relatively high levelsin Western Australia and the Northern Territory reflect the large amounts ofenergy consumed by energy intensive industries, predominantly in themineral processing sector, which are located in these states.

Also varying widely across states are patterns of consumption by differentfuel types. This mainly reflects differences in the distribution of energyreserves and production. For example, brown coal accounts for 44 per centof energy consumption in Victoria, but nothing in the other states. And whileno natural gas is currently used in Tasmania it accounts for over 42 per centof energy consumed in Western Australia (figure A).


2 Final energy consumption, by fuel, 1995-96

PJ %

Petroleum products 1521.4 49.6Natural gas 606.6 19.8Electricity 549.6 17.9Renewables a 203.5 6.6Coal 119.2 3.9Other 68.1 2.2

Total 3068.4 100.0

a Excludes hydroelectricity.

3 Energy consumption, by state, 1995-96

PJ % GJ per person

New South Wales a 1352.6 30.1 208.0Victoria 1191.1 26.5 262.1Queensland 861.4 19.2 286.1Western Australia 630.7 14.0 357.3South Australia 298.7 6.6 201.8Tasmania 94.6 2.1 199.3Northern Territory 66.0 1.5 371.2

a Includes the Australian Capital Territory.



Australian energy consumption, by state and fuel, 1995-96

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Tasmania Northern Territory

Black coal 44%

Black coal 11%

Black coal 51%

Black coal 19%

Black coal 22%

Crude oil 41%

Crude oil 42% Crude oil 75%

Crude oil 39%

Crude oil 37%

Crude oil 31%

Crude oil 37%

Queensland

South Australia

Western Australia

Renewables 11%

Renewables 47%

Renewables 4%

Renewables 4%

Renewables 2%

Natural gas 6%

Natural gas 8% Natural gas 22%

Natural gas 42%

Natural gas 33%

Natural gas 25%

Brown coal 44%


Renewable energy is consumed in each state to some extent but the typesvary widely depending on the available resources. About three-quarters ofthe renewable energy consumed in Tasmania is hydroelectricity.Hydroelectricity is also used in Victoria, New South Wales and Queensland.In Queensland, most of the renewable energy is in the form of bagasse, whichis used in the sugar refining industry. Some bagasse is also used in NewSouth Wales. The other major renewable fuel is wood, which is mainlyconsumed in the residential sector and to a lesser extent in the wood andpaper products industries. Other forms of renewable energy measured byABARE — solar for domestic and commercial uses, other biomass fuels andrenewable gas such as land fill gas and sewerage gas (see appendix C) —account for very small levels of energy consumption in each state.

Among the sectors, the electricity generation sector is the largest consumerof energy in Australia, accounting for 27 per cent of the total (table 4). Thetransport sector (26 per cent) is the next biggest consumer. Total energyconsumption in that sector increased by 9 per cent since the last ABAREreport two years ago. In that report, manufacturing was the second biggestenergy consumer. The three biggest sectors are fairly close in terms of energyuse and are each much bigger than the next largest energy user, the residentialsector, which currently accounts for 8 per cent of total energy consumptionin Australia.

Profiles of fuel consumption vary significantly across sectors (figure B). Forexample, petroleum is virtually the only fuel consumed in the transportsector but a range of fuels is used in the manufacturing sector because of thediversity of industries in the sector. Metal products is one of the biggestenergy consuming manufacturing industries and black coal is the dominant


4 Energy consumption, by sector, 1995-96

PJ %

Agriculture 65.4 1.5Mining 229.9 5.1Manufacturing 1147.4 25.6Electricity generation 1211.5 26.9Construction 46.5 1.0Transport 1177.8 26.2Commercial and services 186.8 4.2Residential 360.4 8.0Other 69.4 1.5



Australian energy consumption, by sector and fuel, 1995-96

BB

Conversion Commercial

Mining Agriculture

Coal products 18%

Coal products 2%

Coal products 71%

Coal products 5%

Gas 53%

Gas 25%Gas 13%

Gas 29%

Petroleum products 85%


Gas 35%

Manufacturing

Transport

Residential

Renewables 12%

Petroleum products23%

Petroleum products13% Petroleum

products4%



Electricity, gas, coal products 1%

Renewables 24%

Electricity 22%

Electricity 15%

Electricity 43%

Electricity 66%

Electricity 6%

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fuel used here, mainly in coke ovens but also in kilns and boilers. Anotherlarge energy consumer, the basic chemical industry, uses mainly natural gasand petroleum products, predominantly as feedstock.

Renewables currently account for 24 per cent of energy consumption in theresidential sector, 12 per cent in manufacturing, but negligible shareselsewhere.

Energy intensity, measured as energy consumption per dollar of output, is astatistic which attracts attention when energy is under the spotlight. In 1994-95 the most energy intensive sectors in the Australian economy wereelectricity, gas and water (by far the highest at 87.6 PJ/$b); transport andstorage (23.5 PJ/$b); and manufacturing (18.7 PJ/$b) (figure C). Within themanufacturing sector, energy intensities vary widely, with particularly highintensities for metal products (50.4 PJ/$b), and petroleum, coal and chemicalproducts (38.0 PJ/$b), and low intensities for textiles, clothing and footwear(6.2 PJ/$b) and machinery and equipment (1.5 PJ/$b). The lowest levels ofenergy intensity are in the commerce and services sector (0.8 PJ/$b) and theconstruction sector (1.6 PJ/$b). Trends in energy efficiency, a related statisticof current interest, are analysed later in this chapter.

2.2 Trends in energy consumption since 1973Energy consumption in Australia has increased by 72 per cent since 1973-74 at an average growth rate of 2.5 per cent a year. One important factorwhich can lead to year to year fluctuations around the overall steady upwardtrend in energy consumption is economic growth. Growth in energy


Australian energy intensity, by sector, 1994-95CC

PJ/$b

Agriculture

Mining

Manufacturing

Electricity, gas and water

Construction

Transport and storage

Commerce and services

Residential

10 20 30 40 50 60 70 80 90


consumption for 1995-96 was 3.0 per cent, slightly higher than the twenty-two year average of 2.5 per cent a year. Between 1989-90 and 1993-94energy consumption increased by only 5.9 per cent in total (an averageincrease of 1.5 per cent a year), mainly because of low economic growth.However, in 1994-95 and 1995-96, energy consumption increased by anaverage of 3.7 per cent a year as economic growth picked up (figure D).

Among the primary fuels, natural gas showed by far the fastest consumptiongrowth over the period since 1973-74, at an average of 7.2 per cent a year(table 5). This resulted in natural gas’s share of total energy consumptionrising from less than 7 per cent in 1973-74 to nearly 18 per cent in 1995-96.This growth was primarily at the expense of crude oil, whose share fell fromjust over 50 per cent to less than 37 per cent over the same period. The dropin oil’s share reflects a decline in petroleum products used in stationary


Annual growth in energy consumption and GDP in Australia

DD

–4

–2

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2

4

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1974-75

1983-84

1980-81

1977-78

1995-96

1992-93

1989-90

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5 Energy consumption growth, by fuel

Annual growth Share Share1973-74 to 1995-96 1973-74 1995-96

% % %

Black coal 3.0 25.3 28.3Brown coal 3.2 10.0 11.6Crude oil 1.1 50.5 36.8Natural gas 7.2 6.6 17.6Renewables 1.4 7.6 5.7

Total 2.5 100.0 100.0


applications such as boilers and kilns in the manufacturing sector andcooking appliances in the residential and commercial sectors. The annualrate of growth in consumption of crude oil and renewables was below therate for energy as a whole over the period. By contrast, growth rates for blackand brown coal were above the overall trend, largely because of their use inelectricity generation.

The fastest growth in energy consumption since 1993-94 has occurred in themining and electricity generation sectors (figure E, table 6). Growth in themining sector at 6.3 per cent a year was by far the highest of the sectors butthe sector still accounts for a only small percentage (5.1 per cent) of totalenergy consumption in Australia. Electricity generation on the other hand is


Australian energy consumption, by sectorEE

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Annual growth Share Share1973-74 to 1995-96 1973-74 1995-96

% % %

Agriculture 2.4 1.5 1.5Mining 6.3 2.3 5.1Manufacturing 1.0 35.1 25.6Electricity generation 4.0 19.5 26.9Transport 2.5 26.2 26.2Construction 2.7 1.0 1.0Commercial and services 3.6 3.2 4.2Residential 2.0 8.8 8.0Other 0.4 2.4 1.5


now the largest consumer of energy, with its share rising from less than 20per cent of total consumption in 1973-74 to almost 27 per cent now. Thisgrowth occurred at the same time as manufacturing’s share of total energyconsumption fell from around 35 per cent to less than 26 per cent.

Growth in energy consumption in the electricity generation sector wasdriven by growth in large electricity consuming industries, especiallyaluminium smelting, and by increased rates of electricity consumption in thecommercial, residential and industrial sectors. Growth in energy consump-tion in the mining sector reflects the strong overall growth in activity,especially in coal, gold and iron ore mining and in oil and natural gasproduction. Relatively slow annual growth in manufacturing sector energyconsumption is driven by a complex array of factors. These include therelatively large energy consumption base already existing in the sector;improvements in energy efficiency (discussed further in the followingsection); and the restructuring of some industries, particularly the iron andsteel industry, after the recession in the early 1980s.

2.3 Trends in energy efficiencyChanges in energy consumption over time can be split into three componentsby a technique called factorisation (Wilson, Ho Trieu and Bowen 1993). Thecomponents are the production effect, the structural shift effect, and the realenergy intensity effect. The production effect is that part attributable tochanges in the level of economic activity. The structural shift effect is thatpart attributable to changes in the sectoral composition of the economy. Thereal energy intensity effect is the change in overall energy use that wouldoccur if the energy intensity of one or more sectors is changed while alloutputs remained the same — that is, changes in energy intensity (energyused per unit of output) are adjusted to allow for changes in output. So if allother things remain equal a reduction in energy intensity can be interpretedas an increase in energy efficiency. The energy intensity effect can be furtherseparated into the fuel mix effect (different fuels generally have differentefficiencies of energy extraction) and the technical effect (primarily changesin technology). Figure F illustrates the separation of factors which influenceenergy consumption.

The components of changes in energy consumption over the twenty-oneyears to 1994-95 (the last year for which data are available) are shown intable 7. The production effect alone contributed 78 per cent of the totalincrease in energy consumption between 1973-74 and 1994-95, or 1739 PJ.



The effect of structural shifts toward more energy intensive sectors in theeconomy accounted for 9.1 per cent of the increase, or 203 PJ over the baselevel of energy consumption in 1973-74. Of this, 2.9 per cent was associatedwith structural change in the manufacturing sector. The production andstructural effects were somewhat offset by a 14.1 per cent improvement inenergy efficiency (14.1 per cent decline in real intensity), equivalent toenergy savings of 314 PJ over the period (table 7).

The improvement in energy efficiency over the period was driven by acombination of technical (8.2 per cent) and fuel mix (5.9 per cent) changes.Technical improvements encompass new technology, operationalprocedures and energy conservation practices. The particular fuel mix


Factors leading to changes in energy useFF

Fuel changes

Real intensity effect

Change in energy

consumption

Sectoral mix

Technology improvementOperational changes

Conservation investmentSubsectoral mix

Overall production activity

Fuel mix effect

Technical effect

Production effect

Structural effect

7 Components of changes in energyconsumption, 1973-74 to 1994-95 a

% PJ

Production effect 77.8 1 739

Combined structural shift effect 9.1 203Manufacturing 2.9 66Other sectors 6.2 138

Real energy intensity effect –14.1 –314Fuel mix –5.9 –132Technical change –8.2 –182

Total change 72.8 1 628

a Following the approach in Wilson et al. (1993), privatetransport is excluded, as output data are not available.


change of note was the increased use of natural gas and electricity at theexpense of petroleum products.

The long term improvement in Australia’s energy efficiency has not beenevenly spread over time or across sectors. Energy efficiency actuallydeclined slightly in the late 1980s, reflecting the effects of low energy pricesand a decline in investment in energy efficient plant and equipment. In recentyears, energy efficiency gains have been more in line with the long termtrend. The overall gain of 2.2 per cent over the three years to 1994-95 wasderived mainly from technical improvements.

The contributions of each sector (industry divisions as shown in appendixE) to changes in total Australian energy efficiency over the longer term andin recent years are shown in the first section of table 8. (Note that a negative


8 Sectoral contribution to energy intensity trends a

Contribution to change

Energy intensity 1973-74 1991-921994-95 to 1994-95 to 1994-95

PJ/$b % %SectorAgriculture 4.89 0.3 0.4Mining 11.86 2.2 0.6Manufacturing 18.71 –4.8 –2.3Electricity, gas and water 87.59 –1.9 –0.3Construction 1.63 0.2 -0.1Transport and storage 23.46 –7.1 –0.3Commerce and services 0.81 0.5 0.0Residential 8.78 –3.5 –0.3Australia total 9.06 –14.1b –2.2b

Manufacturing sectorFood, beverages, tobacco 12.84 0.0 1.5Textiles, clothing, footwear 6.22 0.2 0.2Wood and paper products 8.21 –0.4 –0.4Petroleum, coal and chemical products 37.97 –7.4 –2.7Non-metallic mineral products 31.34 –2.5 –1.3Metal products 50.41 –5.5 –4.3Machinery and equipment 1.50 –0.1 –0.2Manufacturing total –15.7b –7.2b

a Following the approach in Wilson et al. (1993), private transport is excluded as output data are notavailable. A negative term represents an improvement in energy efficiency. b Indicates percentagechange in energy efficiency. The figures for the sector and subsectors indicate percentage pointcontribution to the total percentage change.


term represents an improvement in energy efficiency). The second half oftable 8 shows the gains in energy efficiency for the manufacturing sector inisolation and the contributions made by the subsectors.

Energy efficiency in the manufacturing sector has improved by 15.7 per centbetween 1973-74 and 1994-95. This improvement contributed 4.8percentage points to the total 14.1 per cent improvement for Australia as awhole. A quarter of the efficiency gains in the manufacturing sector are theresult of technical improvements. Within the manufacturing sector, majorcontributions came from petroleum, coal and chemical products and metalproducts. Of the other major divisional sectors, transport and storage, andresidential recorded improvements in energy efficiency, while declines inenergy efficiency occurred in commerce and services, construction, miningand agriculture.

2.4 Energy production, reserves and tradeEnergy production in Australia in 1995-96 is estimated to have been 10 877PJ (table 9), an increase of 20 per cent over the 9038 PJ produced two yearsago. This increase is largely the result of the 86 per cent increase in uraniumproduction from the Ranger and Olympic Dam mines over the two years.When uranium is excluded, energy production increased by 9.5 per cent overthe two years, mainly derived from large increases in production of naturalgas (14 per cent) and black coal (10 per cent).

Black coal has dominated the pattern of energy production in Australia overthe past twenty years. In 1973-74 it accounted for 49 per cent of totalproduction and, interestingly, this figure remains the same in 1995-96


9 Energy production, by fuel, 1995-96

PJ %

Black coal 5 279.0 48.6Brown coal 522.0 4.8Uranium 2 399.4 22.0Crude oil 1 120.3 10.3Natural gas 1 200.8 11.0LPG 96.7 0.9Renewables 258.3 2.4

Total 10 877.1 100.0


(table 9). Uranium now follows black coal at 22 per cent of Australian energyproduction, whereas in 1973-74 crude oil (29 per cent) was the second mostimportant form of energy produced in Australia. In 1995-96 crude oilaccounted for around 10 per cent.

Across the states, the pattern of fuel production varies widely. For example,New South Wales and Queensland together account for 96 per cent of blackcoal production, while Western Australia and Victoria together account for88 per cent of crude oil production and 73 per cent of natural gas production.

Compared with current rates of production, Australia has vast demonstratedreserves of energy, with the exception of crude oil (table 10). Whether or notthese reserves are ever developed will depend on a range of factors, such asthe proximity of reserves to major markets. Generally speaking, resourceavailability as such is unlikely to be a constraint in Australia for the fore-seeable future.

Australia is a substantial net exporter of energy, with approximately 69 percent of Australian energy production in 1995-96 going overseas. The majorenergy exports are black coal and uranium, with shares of total energyexports of 53 per cent and 33 per cent respectively. By far the major energyimport is crude oil and petroleum products, which comprise 99 per cent ofAustralia’s total energy imports (table 11). Around three-quarters of blackcoal production is exported, and about a third of crude oil production isexported.


10 Australian identified recoverable resources of energy minerals and fuels

Demonstrated resourcesInferred Production

Unit Economic Subeconomic resources 1995-96

Black coal a Gt 49 6 very large 0.20Brown coal a Gt 41 3 165 0.05Petroleum b

Crude oil c GL 382 106 na 30.26Natural gas TL 950 1 088 na 30.07LPG d GL 131 83 na 3.65Shale oil GL – 4 564 40 468 –

Uranium a kt(U) 629 77 na 4.33

a As at 1995. b As at 1 December 1994. c Includes condensate. d Naturally occurring. na Not available. Sources: Bureau of Resource Sciences; ABARE.


The major changes in energy trade patterns over the past twenty or so yearshave been the growth of natural gas exports since the development of LNGexport facilities at the Burrup Peninsula in 1989 and the substantial exportsof crude oil as a result of deregulation of the oil industry in the mid-1980s.

2.5 Greenhouse gas emissions from the energysectorTotal greenhouse gas emissions from the production and use of energy inAustralia are estimated to have been 339 million tonnes of carbon dioxideequivalent in 1995-96. This represents an increase of 23 per cent over levelsin 1987-88 (table 12). During the early 1990s the rate of increase inemissions from the energy sector slowed. Over the four years to 1993-94 thetotal increase was just under 4 per cent, compared with 11 per cent in thetwo years between 1987-88 and 1989-90.

This slowdown in emissions growth in the first part of the 1990s reflectedthe slowdown in the growth of energy consumption brought about byimprovements in energy efficiency, switching to fuels such as natural gaswith lower carbon contents (and hence lower carbon dioxide emissions) andslow economic growth. However, because greenhouse gas emissions havenow started to pick up again, as consumption growth has increased, itappears that energy consumption growth is driving the growth in emissionsat this stage.

Emissions are estimated to have increased by just under 7 per cent over thetwo years to 1995-96 (table 12), only slightly under the rate of increase inenergy consumption, of 7.5 per cent.


11 Australian energy trade, 1995-96

Exports Imports

PJ PJ

Black coal and coal byproducts 3 961.0 1.8Uranium 2 484.4 –Crude oil 403.0 917.8Natural gas 412.0 –Petroleum products 199.4 126.9

Total 7 459.8 1 046.5



12 Greenhouse gas emissions from the energy sector, by industry andfuel type a

1987-88 1989-90 1993-94 1995-96

Mt Mt Mt MtFuelCoal b 142 162 167 179Petroleum products 84 87 90 96Natural gas c 44 50 50 55Wood and bagasse 17 18 20 20

ActivityAgriculture 3 3 4 4Industry d 42 47 45 49Electricity generation 116 129 136 144Other energy transformation e 13 13 15 15Road transport 50 53 56 60Other domestic transport 9 7 7 9Commercial f 3 3 3 3Residential 7 8 8 8Other g 1 2 2 3Fugitive h 27 34 34 35

Total domestic i 270 299 310 330(of which CO2 is) (244) (266) (278) (296)

International transport j 5 6 7 9

Total energy i 275 305 317 339(of which CO2 is) (249) (273) (285) (305)

a Includes CO2 and CH4 on a CO2 equivalent basis. To convert CH4 to CO2 equivalent, a globalwarming potential of 24.5 was used. b Includes coal seam gases. c Includes vented and flared gasesfrom oil and gas production. d Includes construction. e Petroleum refining, coke ovens, briquettingand gas industry own use and losses. f Includes ANZSIC divisions F, G, H, J, K, L,M (see appendixE) and the water, sewerage and drainage industries. g Includes direct emissions from petrochemicalfeedstocks and lubricants, bitumen, solvents and waxes (excluding carbon sequestered in theseproducts). h Includes direct emissions from coal mining and petroleum production (venting, flaringand coal seam gases). i Excludes emissions from wood and bagasse combustion. j Internationalaviation and marine bunker fuels loaded in Australia.Sources: ABARE; National Greenhouse Gas Inventory Committee (1996).


The emissions reported in table 12 include carbon dioxide (CO2) andmethane (CH4). Carbon dioxide accounts for the bulk of the total emissions,at an estimated 90 per cent of total energy sector greenhouse gas emissionsin 1995-96. Emissions are reported in two forms according to their origins— first, in terms of fuels and, second, in terms of activity.

Of the fuels, coal production and use accounted for an estimated 53 per centof total emissions from the energy sector in 1995-96, petroleum products 28per cent and natural gas 16 per cent. Use of wood and bagasse accounts for20 million tonnes of emissions a year, but the net effect is assumed to bealmost zero (emissions of methane caused by the combustion of renewablesare included in total emissions) if the trees and sugar cane are grown on asustainable basis. The activities which currently contribute most to energysector greenhouse gas emissions are electricity generation (42 per cent), roadtransport (18 per cent) and industry (14 per cent) (table 12).

In table 12, emissions from energy transformation (such as electricitygeneration and oil refining) are allocated to the transformation activity ratherthan the end use. This approach has been adopted because it shows wherethe emissions actually take place. The alternative approach of attributing allemissions to energy use would require manipulation of data to extract all theenergy uses associated with energy supply as distinct from end use. Forexample, in the case of natural gas supply this would involve distinguishinguse in gas production, transmission and distribution, which are recordedunder three separate economic activities — mining, transport and gasdistribution.

One implication of using the method of attributing emissions to thetransformation activity rather than to the end use is that sectors which largelyuse electricity, such as the residential and commercial sectors, are shown ashaving very low levels of emissions because any electricity related emissionsare attributed only to electricity generation. Therefore, the scope forreducing carbon dioxide emissions from the residential sector is greater thanmight be suggested by the estimates in table 12, given that electricityaccounts for a large proportion of the energy consumed in that sector.




3.1 Method and assumptionsThe major input into ABARE’s biennial energy projections is theinformation collected in the biennial fuel and electricity survey. The surveycoverage includes only those establishments consuming greater than oneterajoule a year. Consequently, the survey coverage is concentrated in themining, manufacturing and electricity and gas production sectors. There isalso some coverage in the government administration, defence, communica-tions and community services sectors (for example, hospitals and uni-versities).

In total the survey covers about 5300 separate establishments, controlled byabout 3000 organisations. Information is collected on current and expectedenergy consumption patterns and levels. The projections for these sectors aretherefore implicitly based on consumers’ own expectations about factorswhich will influence their energy use. These factors were outlined earlier andinclude economic growth, energy and commodity prices, governmentpolicies and the availability of various fuels. The survey based projectionsare, however, subject to an extensive system of checking and are modifiedin the light of energy suppliers’ projections and estimates about the amountof energy available. Further details of the survey are provided in appendixC.

Responses to the survey are also supplemented by ABARE projections ofthe energy requirements of known and likely new projects, such as newmineral processing plants or gas pipelines coming on stream. Informationon these developments is obtained from a wide range of sources includingthe project developers. In general, only those projects which are alreadycommitted or have reached the final feasibility stage are included.Assumptions about new projects are detailed in the relevant sections.

In some cases announced intentions and responses to the survey do notadequately cover the full projection period. In such cases, judgments aboutlong term outcomes must be made, based on an assessment of the relevantmarket factors. For example, in the case of fuel use for electricity generation,utilities generally have not announced plans to cover the full period to 2009-

30

3



10, so assumptions must be made on the likely fuel source for any long termcapacity expansions. The assumptions take into account the competitivenessof available fuels and, as far as possible, long term environmental or otherpolicies which could affect fuel choices.

Energy consumption in the sectors not adequately covered by the survey —agriculture, construction, wholesale and retail trade, transport other than rail,finance and insurance, government administration and defence, health andcommunity services, property and business services, cultural and recrea-tional services, personal and other services and residential — is projectedusing economic models of varying degrees of complexity. Details of themodels are provided in appendix D. In general, the models are used toestimate consumption for Australia as a whole. Projections for the states arethen based on projected trends in population.

Many possible policy and technological changes would have only relativelysmall effects on the overall energy sector. For example, unanticipatedchanges in policies affecting only small parts of the energy market are


13 Economic and demographic assumptions

Australian real Nominal World oil Australian GDP growth exchange rate prices a population b

% US$/A$ US$/bbl

1994-95 4.1 0.739 17.80 18 054 0001995-96 4.3 0.755 18.00 18 306 1001996-97 3.3 0.772 20.35 18 536 9001997-98 3.2 0.768 18.20 18 745 5001998-99 3.2 0.760 18.25 18 941 4001999-00 3.5 0.751 19.20 19 134 0002000-01 3.5 0.742 19.50 19 323 3002001-02 3.5 0.740 19.00 19 509 3002002-03 3.5 0.740 19.00 19 692 1002003-04 3.3 0.740 19.50 19 871 5002004-05 3.3 0.740 19.50 20 047 1002005-06 3.3 0.730 19.50 20 219 2002006-07 3.2 0.730 20.00 20 387 9002007-08 3.2 0.730 20.00 20 553 3002008-09 3.0 0.720 20.00 20 716 0002009-10 3.0 0.720 20.00 20 875 900

a World trade weighted price in 1996-97 dollars. b As at 30 June.Sources: ABS (1996); ABARE.


unlikely to have significant effects on the overall energy sector. However,assessing impacts of possible broader policies such as those to addressclimate change is a more critical issue, as these could have major effects onthe whole energy system. For example, policies to meet substantialgreenhouse gas reduction targets could have a major impact on fuel use inelectricity generation, with radiating impacts for fuels used elsewhere. Inthis report, no attempt is made to anticipate possible fundamental policychanges which could effect the energy sector.

Assumptions for economic, demographic and other variables influencingenergy production and use are also central to the projection exercise. Thekey assumptions are set out in table 13. Further background on ABARE’smacroeconomic assumptions and oil price projections is provided in Fisher,Penm and Woffenden (1997) and Donaldson (1997).

3.2 Projected trends in energy consumption, by fuelTotal energy consumption in Australia is projected to grow at an averagerate of 2.1 per cent a year between 1995-96 and 2009-10 (table 14). Thisgrowth would result in total consumption of 5987 PJ in 2009-10 (figureG). The projected rate of growth is slightly less than the average for thepast 22 years (2.5 per cent) for a few main reasons. First, future growthwill be from a substantially larger base level of consumption. Second,further improvements in energy efficiency are expected, in response totechnological improvements and policy and price induced changes inconsumer behaviour. Third, there is the expectation, reflected in theintentions of survey participants, that environmental policies could beintroduced to reduce energy consumption in order to reduce emissions fromthe sector.


14 Projected Australian energy consumption, by fuel

Consumption Growth rate Share Share2009-10 1995-96 to 2009-10 1995-96 2009-10

PJ % % %

Black coal 1 431.1 0.8 28.3 24.0Brown coal 559.7 0.5 11.6 9.3Crude oil 2 034.7 1.5 36.8 34.0Natural gas 1 666.6 5.5 17.6 27.8Renewables 294.6 0.9 5.7 4.9

Total 5 986.7 2.1


The projected average annual growth in energy consumption (2.1 per cent) isless than the assumed growth in gross domestic product (3.3 per cent), largelybecause of expected improvements in energy efficiency. Similar trends areexpected in other OECD countries. For example, the International EnergyAgency (1996) projects that total energy consumption across the OECD willgrow at an average rate of 1.4 per cent a year to 2010. Over the same periodOECD economic growth is assumed to average 2.5 per cent a year.

Among the primary fuels, crude oil is expected to continue to dominate,accounting for 34 per cent of projected total energy consumption in 2009-10 (figure G; table 14). The most notable fuel consumption pattern is thecontinuing strong growth in the use of natural gas. The main reasons for theprojected growth in natural gas consumption are:

• extensions of the natural gas pipeline network (especially in Queenslandand Western Australia) which are expected to open up large markets,particularly in the mining, manufacturing and electricity generation sectors;

• reforms in the gas and electricity markets which are leading to oppor-tunities for private investment in the electricity generation and cogenera-tion sectors and allowing natural gas producers to negotiate directly withbuyers; and

• an expanding Asia Pacific LNG market which is driven by strongeconomic growth and energy related growth; environmental and fuelsecurity policies which encourage natural gas use; and the growth in theuse of natural gas for power generation.


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Consequently the share of natural gas in primary energy consumption isexpected to increase from almost 18 per cent in 1995-96 to almost 28 percent in 2009-10 (table 14).

Natural gas consumption is projected to grow at an average rate of 5.5 percent a year to 2009-10 (table 14). This growth rate represents a significantincrease over the growth experienced over the five years to 1995-96, whichaveraged 3.8 per cent a year. The main natural gas consuming sectors areexpected to continue to be manufacturing (accounting for 41 per cent of totalnatural gas consumption in 2009-10), electricity generation (27 per cent) andmining (15 per cent).

The most significant projected change in the pattern of natural gasconsumption is the increase in the share of natural gas used to generateelectricity (figure H). Electricity generation is projected to account for 27per cent of total natural gas consumption in 2009-10, up from 19 per cent in1995-96. This growth reflects the expectation that a substantial proportionof new incremental electricity generating capacity will be gas fired.

As far as possible, the projected growth in the use of natural gas for electricitygeneration is based on utilities’ or private enterprises’ announced plans.However, these generally do not cover the full projection period to 2009-10.As a result, some assumptions had to be made. Where the likely fuel sourcefor necessary capacity expansions is unclear, it is generally assumed thatnatural gas will be used. This assumption is based on a number of factors.

• First, it is based on the environmental advantages of natural gas, whichwill become increasingly important if international attention to climatechange policies continues, and natural gas is favoured over coal becauseof its lower carbon content.

• Second, it recognises some of the other advantages that natural gas hasover other fuels for generating electricity — for example, the lower set-up costs, shorter lead times and higher efficiencies for gas fired generatingplant.

• Third, the assumption takes account of the impacts of natural gas andelectricity market reforms underway in Australia, and the increasingscope they will provide for natural gas fired power generation. Projectedfuel consumption in electricity generation is discussed further in thefollowing section.



New pipelines are expected to open up some large markets, especially in themining and manufacturing sectors where a number of large energy intensiveprojects, existing and greenfield, are expected to start using natural gas orto expand capacity. For example, the Goldfields Gas Transmission pipelineproject which came on stream in August 1996 is projected to lead to anincrease in natural gas consumption in the Goldfields region in WesternAustralia in excess of 30 PJ a year in the short term and potentially up to 55PJ in the long term, while production of iron via the direct reductiontechnology and combined iron and steel plants in the Pilbara and Geraldtonregion will add an estimated 230 PJ a year to natural gas consumption by2009-10. Major capacity expansions and fuel switching at alumina plants inWestern Australia and the Northern Territory, and switching to ethane(included in natural gas) at the ICI petrochemical plant at Botany in NewSouth Wales are also incorporated.

Western Australia is expected to continue to be the largest gas consumingstate, accounting for 44 per cent of the total in 2009-10, an increase over itscurrent share of 33 per cent. The projected increase in Western Australia’sshare is the result of a number of large gas using projects coming on stream,including iron and steel plants and the expansion of LNG supply capacity.The processing of iron ore and LNG are energy intensive activities andinvolve consumption of large volumes of natural gas.

Victoria and New South Wales are expected to be the next biggest gasconsuming states, accounting for 21 per cent and 14 per cent respectively ofAustralian natural gas consumption.


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Consumption of natural gas is projected to grow most strongly inQueensland, at an average rate of 9.9 per cent a year. Queensland is projectedaccount for 10.6 per cent of total natural gas consumption in 2009-10 upfrom 6.0 per cent in 1995-96. This strong growth is a result of a combinationof new gas pipelines from south west Queensland to Wallumbilla (nearBrisbane) and the Mount Isa area encouraging new natural gas consumingprojects as well as substitution of black coal and petroleum products fornatural gas. Consumption of natural gas in the Gladstone area is alsoexpected to increase strongly as a result of the establishment of a greenfieldalumina plant. Table 15 is a list of the major energy projects in Australiawhich are incorporated into the current set of projections. Note that this is


15 Major energy projects in Australia, 1996–2010

Company Location Project Major fuel

New South WalesIndustrialICI Australia Botany Substitution of feedstock from Ethane

petroleum products to ethaneElectricity generationSithe Energies Smithfield Cogeneration plant – 160MW Natural gasSithe Energies Kurnell Cogeneration plant – 350MW Natural gasALISE Botany Cogeneration plant – 350MW Natural gasPacific Power Tallawarra Combined cycle electricity

generation – 350MW Natural gasVictoriaElectricity generationKemcor Altona Cogeneration plant 40MW Natural gas

QueenslandIndustrialBoyne Smelters Boyne Island Aluminium smelter increase ElectricityKorea Zinc Townsville Zinc smelter ElectricityBHP Bowen Basin Ammonium nitrate plant Coal seam

methaneComalco Gladstone Alumina refinery Natural gasWMC Phosphate Hill Phosphate plant Natural gas

Electricity generationAES Corporation Townsville Power station – 288MW LPGTransfield Yabulu Power station – 159MW Aviation turbine

fuel

Continued



15 Continued

Company Location Project Major fuel

Oakey Power Oakey Power station – 303MW Natural gasAusta Electric South Power station – 600–1400MW Black coal

QueenslandMIM Mount Isa Mica Creek conversion from Natural gas

black coal to natural gasSithe Energies Gibson Cogeneration plant Natural gas

Island – 330–660MW

South AustraliaIndustrialWMC Olympic Copper/uranium Electricity

Dam mine expnasion

Electricity generationCU International Osborne Cogeneration plant – 180MW Natural gas

Western AustraliaIndustrialGGT Goldfields Natural gas pipeline Natural gasNWS Partners Burrup Peninsula LNG expansion from 7.5 MT Natural gas

to 14.5 MTBHP Pt Hedland Direct Reduced Iron (DRI) plant Natural gasTiwest Bunbury Titanium dioxide plant expansion Natural gasKingstream Resources Geraldton Iron and steel plant Natural gas/

electricityUnknown Western Australia DRI plants Natural gasUnknown Western Australia LNG plant Natural gas

Electricity generationWestern Power Collie Power station – 300MW Black coalMission Energy Kwinana Cogeneration plant – 116MW Natural gas/

refinery fuelBHP Minerals Port Hedland Power station – 105MW Natural gasBHP Minerals Newman Power station – 105MW Natural gasWMC Kalgoorlie Power station – 40MW Natural gasWMC Kambalda Power station – 40MW Natural gasWMC Mt Keith Power station – 40MW Natural gasWMC Leinster Power station – 40MW Natural gasNormandy Power Kalgoorlie Power station – 114MW Natural gas

Northern TerritoryIndustrialNabalco Gove Conversion of alumina plant Natural gas

from oil to natural gas



not an exhaustive list and does not include many mining projects or projectswhich are considered medium to small in their effect on energy consumption.

While consumption of natural gas is projected to grow the fastest of theprimary fuels, crude oil is expected to continue to account for the largestshare of the fuel mix over the projection period. In contrast black coal, whichhistorically maintained the second largest share of energy consumption isprojected to fall to 24 per cent by 2009-10 due mainly to the large increasein the use of natural gas for electricity generation. Demand for black coalwill continue to be driven by its use to generate electricity. Reflecting this,New South Wales and Queensland, where electricity generation is largelycoal based, are together projected to account for over 84 per cent of projectedblack coal consumption in 2009-10.

Most of the crude oil consumed in Australia is in the form of petroleumproducts. Consumption of petroleum products is projected to increase at anaverage rate of 1.5 per cent a year to 2009-10. Automotive gasoline isexpected to continue to account for the biggest share of Australian petroleumproducts consumption, accounting for 33 per cent of the total in 2009-10,down from 37 per cent in 1995-96. The other major petroleum products,automotive diesel oil and aviation turbine fuel, are expected to increase theirshares from 28 per cent and 10 per cent in 1995-96 to 31 per cent and 14 percent respectively in 2009-10 (figure I).

Brown coal consumption is expected to grow only slightly over the periodto 2009-10 as a result of increasing use of natural gas in the electricity

Use of petroleum products in AustraliaII

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generation sector and the assumption that no additional brown coal firedelectricity generating capacity will be added over the projection period.Consequently, brown coal’s share of total energy consumption is projectedto fall to 9.3 per cent in 2009-10 from its current level of 11.6 per cent.

Consumption of renewables (excluding renewable gas) is expected toincrease at 0.9 per cent a year to 2009-10, less than the growth rate over thepast twenty-two years (1.4 per cent). There is limited scope to substantiallyincrease the use of traditional renewable energy sources and in the absenceof major technological developments, big increases in the use of renewableenergy are unlikely to be economically feasible over the projection period,but may be possible over the longer term (Stevens 1994).

Nevertheless there is considerable scope to improve the efficiency withwhich bagasse is used. Agreement has been reached between the electricitysupply industry and five sugar mills to supply 49 MW of electricity to thegrid by 1998. The agreement has provision for increasing the supply to 95MW with the participation of other sugar mills.

No major expansions of hydroelectricity capacity are projected, butincreased use of renewable gas (landfill gas and sewage gas) to generateelectricity is expected, from the current level of 3.6 PJ to 18.7 PJ by 2009-10. Some increases in small markets, such as solar water heating in theresidential and commercial sectors, are expected in response to Common-wealth initiatives such as the Energy Card, which provides concessionalfinance for investments in solar water heaters.


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Electricity consumption is projected to increase at an average rate of 2.1 percent a year to 2009-10. The growth is expected to vary across Australia, withrelatively strong growth expected in Queensland (3.3 per cent) and WesternAustralia (3.3 per cent). The stronger trends in these two states largely reflectthe influence of their projected strong economic growth and populationgrowth as well as the large number of energy intensive industries located inthose two states.

The manufacturing sector is expected to continue to be the major consumerof electricity, accounting for 34 per cent of the total in 2009-10 (figure J).Within the manufacturing sector, the metal products industries, primarily thealuminium smelting industry, are expected to continue to be majorconsumers of electricity.

3.3 Projected trends in energy consumption, bysector and stateThe conversion, transport and manufacturing sectors are projected tocontinue to be the major energy consuming sectors out to 2009-10 (figureK). Of the total 5987 PJ of projected energy consumption in 2009-10, 29 percent is expected to be consumed by the conversion sector which is in turndominated by electricity generation.

Electricity generation is expected to maintain its share of around 26 per centof total energy consumption over the projection period (table 16). Themanufacturing and transport sectors are also projected to each account for


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around 26 per cent of total energy consumption in 2009-10. Reflectingdifferent projected growth rates among the sectors, the share of total energyconsumption is expected to decline slightly in the transport, residential andagriculture sectors while it increases in all other sectors. Projected energyconsumption growth is strongest in the mining sector, at 3.9 per cent a year,but by 2009-10 this sector’s share of total energy consumption is projectedto be only 6.5 per cent (table 16). Overall, the sectoral pattern of consumptionis expected to remain broadly similar to that of the past twenty-two years(figure K).

Within the electricity generation sector, significant changes in the patternof fuel consumption are expected. While coal is expected to continue to bethe major fuel used, the role of natural gas is expected to increase substan-tially. By 2009-10, natural gas is projected to account for 21 per cent of fuelinputs for thermal electricity generation, compared with 9 per cent in 1995-96 (figure L). Black coal is expected to account for 52 per cent and brown coalfor 25 per cent of the energy consumed in electricity generation in 2009-10.

As noted earlier, most of the economically favourable sites for hydro-electricity have been developed or are located in environmentally sensitiveareas, and therefore electricity generated from hydro schemes is projectedto increase only slightly over the projection period. The increase will comefrom increasing demand for electricity in Tasmania, which is predominatelyhydro based. The contribution from other renewable sources such as solar,wind and tidal is expected to remain small (further discussion of solar is inappendix C).


16 Projected Australian energy consumption, by sector

Growth rate, Share Share1995-96 to 2009-10 1995-96 2009-10

% % %

Agriculture 1.5 1.5 1.3Mining 3.9 5.1 6.5Manufacturing 2.3 25.6 26.4Electricity generation 1.7 26.9 25.5Construction 2.4 1.0 1.1Transport 2.0 26.2 26.0Commercial and services 3.3 4.2 4.9Residential 1.0 8.0 6.9Other 1.3 1.5 1.4


With the development of a national electricity grid connecting New SouthWales, Victoria, Queensland and South Australia the exercise of projectingenergy requirements and additional increments of generating capacity on astate level is a complex one. The projections generated for this report haveassumed that flows of electricity between states will be similar to levels inrecent years, with the exception of the proposed link between New SouthWales and Queensland, which has been projected to come on stream in 2001.

In New South Wales and Victoria future generating capacity increases areexpected to be met by natural gas in combined cycle and gas turbinetechnology (table 17). Additional capacity for South Australia is expectedto be natural gas fired. Further demand will also continue to be met by theNew South Wales – Victoria – South Australia electricity grid link.

In Queensland the majority of additional capacity requirements are assumedto be met by a combination of black coal and natural gas fired base loadstations, with some additional peaking requirements supplied by natural gas,LPG and aviation turbine fuel and the linking of the New South Wales andQueensland grid. The natural gas pipeline from south west Queensland toMount Isa will supply gas to the Mica Creek power station which will beconverted from black coal to natural gas. This power station will supply boththe Mount Isa silver–lead–zinc operations as well as a number of otherindustrial developments in the north west Queensland region.

Western Australia is expected to continue to be supplied with electricity froma mix of black coal and natural gas fired plant. The 300 MW Collie black


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��

yy Petroleum

products

Brown coal briquettes

Brown coal

Black coal

��

yyyyyyyyyyyy

Natural gas

1974-75

1988-89

1981-82

2009-10

2002-03

1995-96


coal fired station is scheduled to be completed in 1998, while 274 MW ofnatural gas fired generating units have been located adjacent to the Gold-fields Gas Transmission pipeline to supply regional demand for electricityin gold and nickel operations. An additional 210 MW of natural gas turbineshave also been installed in the Pilbara to replace oil fired units and to supplyfuture demand for electricity at the BHP Direct Reduction Iron plant.

The use of natural gas in dedicated private power stations is expected tocontinue as additional large demands for electricity are generated bygreenfield iron and steel processing plants and LNG facilities.


17 Projected fuel inputs for thermal electricity generation in Australia,by state

1995-96 1999-2000 2004-05 2009-10

PJ PJ PJ PJNew South WalesBlack coal 547.1 515.3 539.9 560.4Natural gas 2.4 73.1 75.9 83.3Petroleum 1.7 1.9 2.1 2.0

VictoriaBrown coal 509.9 543.4 545.4 544.6Natural gas 39.1 36.9 57.8 70.0Petroleum 0.5 0.4 0.4 0.3

QueenslandBlack coal 320.9 370.8 385.7 424.6Natural gas 2.0 35.2 86.5 89.4Petroleum 6.4 11.9 20.0 20.0

Western AustraliaBlack coal 93.4 95.4 100.6 115.0Natural gas 54.6 92.3 122.1 131.5Petroleum 22.4 10.4 12.0 11.5

South AustraliaBlack coal 33.7 35.4 37.3 39.2Natural gas 35.1 48.5 54.8 56.6Petroleum 0.7 0.3 0.3 0.3

TasmaniaPetroleum 0.2 0.2 0.2 0.2

Northern TerritoryNatural gas 16.1 22.3 24.8 26.8Petroleum 3.8 3.7 4.2 4.8


Neither Tasmania nor the Northern Territory are expected to require anymajor additions to generating capacity in the projection period. An undersealink between Tasmania and Victoria is a possibility early next century but ithas not been included in these projections. Details of projected fuelrequirements for electricity generation, by state, are provided in table 17.

A current feature of the electricity generation sector is the emergence ofprivate cogeneration plants which produce both power and heat, with theheat being used onsite or in the immediate vicinity and electricity beingeither used onsite or sold back to the grid. Because the waste heat is used,cogeneration is typically 60–75 per cent efficient. Hence cogeneration offersenergy efficiency gains and consequent reductions in environmental impactsof energy supply and use, including greenhouse emissions (Commonwealthof Australia 1996).

In 1994-95 over 1050 MW of cogenerated capacity was installed in theindustrial sector and in recent years a number of cogeneration plants havebeen announced or are approaching final commitment (table 15). Capacityfrom cogeneration plants is expected to approach 4000 MW by the end ofthe projection period, with around 80 per cent fuelled by natural gas.

The transport sector is expected to maintain its share of around 26 per centof total energy consumption (table 16). Transport is also expected to accountfor the largest proportion of final, or end use, energy consumption — 36 percent in 2009-10. Energy consumption in the transport sector is expected togrow at an average of 2.0 per cent a year, slightly less than the rate 2.5 percent a year over the past twenty-two years.

Road transport is expected to dominate the sector, accounting for 74 per centof the total in 2009-10, down slightly from its current share of 76 per centof transport sector fuel consumption. The deregulation of price setting andopen access to oil terminals in the petroleum industry is expected to free upthe market and increase competition. This should lead to smaller differentialsbetween country and city prices. However, overall, petrol prices are assumedto increase at the same rate as oil prices and this will be the main factordriving market developments (table 13).

The major change expected in the pattern of consumption in the roadtransport sector is the continuing substitution of unleaded for leadedautomotive gasoline. While in 1995-96 leaded gasoline accounted for 40 percent of total automotive gasoline consumption, by 2005-06 virtually all



automotive gasoline consumption is expected to be unleaded (figure M). Thedecline in the use of leaded fuel reflects the assumption that leaded fuelvehicles will gradually be eliminated from the fleet over time.

Consumption of natural gas is expected to grow strongly over the period butfrom a low base. In 2009-10 it is expected that natural gas will supply 30.5 PJ(2.7 per cent of total) to the road transport sector, largely to the urban busmarket. Automotive diesel oil and LPG are both expected to grow at 3 percent a year to 2009-10.

Consumption of energy in the air transport sector is also expected to continueto grow strongly, in response to the growing tourism industry and increasingair travel in response to air fares which are competitive with the prices forother transport. Consumption of aviation fuels is expected to increase at 3.9per cent a year to 2009-10. Further details on assumptions are provided inappendix D.

Consumption of energy in the rail and water transport sectors is relativelysmall compared with road and air transport. Rail transport energyconsumption is expected to grow at an average rate of 1.8 per cent a year,with electricity increasing its share from 23 per cent in 1995-96 to 28 percent in 2009-10, reflecting the increasing electrification of the rail system.Water transport energy consumption, which is dominated by petroleumproducts, is expected to decline, on average, by 0.1 per cent a year over theprojection period.


Transport sector fuel use in AustraliaMM

PJ

300

600

900

1200

1500

1974-75

1988-89

1981-82

2009-10

2002-03

1995-96

��

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��

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yyy

yyy

yyy

yyy

yyy

yyy��

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yyy

yyy

yyy

yyy

yyy

yyy

yyy

yyy

yyy

yyy

��yyLPG

Fuel oil and IDF

Aviation fuel

��

yyyyyyyyyADO

Leaded

�yUnleaded

Natural gas

Electricity


Natural gas use in pipeline compressors (classified as a transport activity) isprojected to grow strongly, averaging 5.7 per cent a year. This reflects newpipelines such as the Goldfields Gas Transmission pipeline and the southwest Queensland pipelines to Wallumbilla and Mount Isa coming on stream.It is also caused by the strong growth in natural gas consumption, which willrequire the capacity of some existing pipelines to be increased.

In the manufacturing sector, the major change in energy consumption isexpected to be the increasing use of natural gas. This reflects fuel switchingin some major plants, capacity expansions in chemical and mineralsprocessing plants as well as a number of greenfield energy intensive projects(table 15). Overall, natural gas is projected to account for 43 per cent of fuelconsumption in the manufacturing sector by 2009-10, an increase over thecurrent share of 30 per cent.

However, within the manufacturing sector there will still be a diverse rangeof fuel use patterns. For example, black coal is widely used to generateprocess heat in boilers and to provide heat in kilns, electricity is used in allmanufacturing sectors for electric motors, lighting and heating and petro-leum products are used in the chemical industry as speciality feedstocks andas by product process fuel in petroleum refining (refinery fuel).

The mining sector is expected to exhibit the fastest rate of growth in energyconsumption over the projection period. Particularly large increases inenergy consumption are associated with expansion of LNG supply. Naturalgas currently accounts for 54 per cent of energy consumed in the miningsector, and this share is expected to increase to 63 per cent in 2009-10. Dieseland electricity are the other main fuels used in the mining sector.

Relatively strong growth in energy consumption, 3.3 per cent a year, is alsoexpected in the commercial sector (table 16). However, this rate of growthis slightly slower than that over the past twenty-two years (3.6 per cent ayear).

Electricity and natural gas are expected to continue to dominate the fuel mixin the commercial sector. Natural gas is expected to account for 27 per centof the total in 2009-10, up from 24 per cent in 1995-96, reflecting theexpectation that new or improved gas technology in areas such as airconditioning will encourage switching to natural gas. Electricity is expectedto account for 67 per cent of the energy consumed in the commercial sectorin 2009-10, up slightly from its current share of 66 per cent.



Only minor changes are expected in the pattern of fuel consumption in theresidential sector. Electricity is expected to be the major form of energy used,accounting for 43 per cent of the total in 2009-10, about the same as its sharein 1995-96. Natural gas is expected to increase its share of the market, from29 per cent of the market in 1995-96 to 35 per cent in 2009-10. Consumptionof wood in the sector is expected to decline, in line with increasingenvironmental concerns and competitiveness of gas and electricalappliances. The use of solar hot water heating is expected to increase overthe period, from a very low base. By 2009-10, solar’s estimated contributionto the residential sector is 1 per cent, or 4.3 PJ.

Growth in energy consumption in the agriculture and construction sectors isprojected to increase by 1.5 per cent and 2.4 per cent a year respectively(table 16). Diesel is expected to continue to be the major fuel used.

3.4 Projected trends in energy consumption, byequipment type

Data on energy consumption by the type of equipment or devices in whichit is used are provided in appendix table C2. Trends in energy consumption,by equipment type, are shown in figure N. Note that total energy con-sumption, by equipment type, is considerably greater than the total else-where, because it is impossible to remove double counting without omittingthe energy consumed in conversion equipment.

The largest single category of end use device continues to be boilers, whereenergy is used to produce steam for process heat, electricity generation and


Australian energy consumption, by equipment typeNN

PJ

2 000

4 000

6 000

8 000

10 000

1974-75

1988-89

1981-82

2009-10

2002-03

1995-96

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Boilers

Engines

Metallurgical

�yChemical and refining

Domestic appliances

Commercial appliances

�yNon fuel-useOther


increasingly for cogeneration — the coproduction of electricity and processheat. In 2009-10, 26 per cent of total energy consumption is expected to beconsumed in boilers. Of this, 77 per cent was to produce steam for the solepurpose of electricity generation and a further 16 per cent for cogeneration.

Other notable equipment types used in energy conversion are chemical andpetroleum refining equipment (23 per cent of total energy consumption),coke ovens (1.9 per cent) and briquetting plants (0.2 per cent). Mobileengines, defined to include all transport equipment, account for 19.5 per centof total energy consumption. Stationary engines account for a further 3.6 percent. Stationary engines include turbine and piston engines for powergeneration, compressor engines for pipeline use and fluid pumps.

The fuels used in different equipment types generally reflect the uses towhich the equipment is put, along with relative fuel prices. Black coal isused mainly as a boiler fuel, and in coke ovens. Natural gas is a more versatilefuel and can be used in most types of energy equipment. Petroleum productsare used mainly in mobile and stationary engines where fewer fuelsubstitutes are available.

3.5 Projected trends in energy production and tradeTotal energy production in Australia is projected to be 19 185 PJ in 2009-10(table 18), over 76 per cent above the 1995-96 level, translating to an averagerate of 4.1 per cent a year. This projected growth rate is above that expectedfor energy consumption in Australia as energy exports are expected to grow


18 Projected Australian energy production

Production Average annual growth2009-10 1995-96 to 2009-10

PJ %

Black coal 7 506.1 2.5Brown coal 559.7 0.5Uranium 7003.0 8.0Crude oil 869.6 –1.8Natural gas 2 836.2 6.3LPG 115.8 1.3Renewables 294.6 0.9

Total 19 185.0 4.1


strongly. Black coal and uranium are expected to dominate the pattern ofboth energy production (table 18, figure O) and trade (table 19) over theprojection period. By 2009-10, black coal is expected to account for 39 percent of Australian energy production in energy terms and uranium almost37 per cent. At the same time black coal is expected to account for 41 percent of Australian energy exports and uranium 47 per cent. Black coal is byfar more important than uranium in value terms.

Uranium production is expected to reach nearly 12 635 tonnes U in 2009-10, as a result of the abolition of the three mines policy. In the short termproduction from the Ranger and Olympic Dam mines is expected to increase


Australian energy production, by fuelOO

PJ

1974-75

1988-89

1981-82

2009-10

2002-03

1995-96

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5000

10000

15000

20000

Renewables��yyLPG

��

yyyyyyyyy Natural gas

Crude oil

Brown coal

Black coal

Uranium

19 Projected Australian energy trade

Average Averageannual growth annual growth

Exports 1995-96 Imports 1995-962009-10 to 2009-10 2009-10 to 2009-10

PJ % PJ %

Black coal and byproducts 6 083.5 3.1Uranium 7003.0 7.7Crude oil 391.3 –0.2 1 510.8 3.6Natural gas 1 169.6 7.7Petroleum products 206.1 0.2 144.6 0.9

Total 14 853.5 5.0 1 655.4 3.3


to capitalise on current market growth. In the longer term (but within thecurrent outlook period) a number of greenfield uranium mines are expectedto come on stream.

A feature of the outlook scenario is the strong projected growth in productionof natural gas, driven largely by increases in the volume of LNG exports.Exports of LNG are expected to grow at an average rate of 7.7 per cent ayear to 2009-10 (table 19). Underpinning this projection is the assumptionthat over the next fifteen years two new liquefaction trains will be added tothe North West Shelf project and a greenfield project will be developed onthe Gorgon field to meet growing demand in the Asia Pacific region.

Other potential greenfield projects — such as Scarborough in the CarnarvonBasin, Scott Reef and Breckneck in the Browse Basin and Undan/Bayu inthe Timor Sea — could come on stream over the projection period, althoughat this stage they are too preliminary to include in the projections.

For both coal and LNG, growth in exports will depend importantly ondevelopments in Asian markets. Strong growth in thermal coal demand inAsia is expected to offer significant opportunities for the major coalexporters to expand supply (Graham, Middleton and Hogan 1997), and AsiaPacific demand for LNG is projected to grow at around 6 per cent a yearover the projection period (IEA 1996), with much of this increased demandexpected to be met by Australia.

Projections for crude oil and condensate production are provided by theBureau of Resource Sciences (1996) (table 20). The BRS projections suggestpeak production in 1999-2000 at between 32 294 megalitres (557 thousandbarrels a day) and 44 886 megalitres (773 thousand barrels a day), decliningto between 16 684 megalitres (288 thousand barrels a day) and 32 178megalitres (555 thousand barrels a day) by the year 2009-10.

Over the projection period net crude oil imports are projected to increasefrom 10 560 million litres in 1995-96 to 26 800 million litres in 2009-10, anaverage increase of 6.9 per cent a year.

Naturally occurring LPG production is expected to increase by about 20 percent over the projection period, mainly as a result of the Burrup PeninsulaLPG export scheme based on the Wannea, Cossack, North Rankin andGoodwyn fields coming on stream. As a result, exports of LPG are expectedto increase dramatically in the short term.



20 BRS projections of Australian crude oiland condensate production Identified and undiscovered

Probability

10% 90%

ML ML

1996-97 32 845 27 2161997-98 34 238 17 3901998-99 40 853 30 6691999-00 44 886 32 294

2000-01 40 882 28 7252001-02 37 139 25 8522002-03 35 166 23 7342003-04 34 731 21 8772004-05 37 778 22 081

2005-06 40 099 22 2262006-07 38 590 20 6302007-08 36 762 19 4112008-09 34 789 18 2802009-10 32 178 16 684

Source: BRS (1996).

3.6 Projected greenhouse gas emissions from theenergy sectorTotal greenhouse gas emissions from the Australian energy sector areprojected to be 428 million tonnes of carbon dioxide equivalent in 2009-10(table 21), a 26 per cent increase over the estimated level in 1995-96 (at anaverage growth rate of 1.7 per cent a year) and a 40 per cent increase overthe 1989-90 level. Coal is expected to continue to account for the bulk ofenergy sector emissions, comprising 46 per cent in 2009-10. Petroleumproducts are expected to account for 27 per cent and natural gas about 23per cent.

Among the sectors, electricity generation accounts for the largest amount ofemissions and this is expected to continue, based on projected coal use as afuel input. Electricity generation is expected to account for 41 per cent ofemissions in the year 2009-10. The next two most significant sectors areroad transport and industry with projected shares of 18 per cent and 16 percent of energy related greenhouse gas emissions respectively by the end ofthe projection period.




21 Projected greenhouse gas emissions from the energy sector, by industry and fuel type a

1999-2000 2004-05 2009-10

Mt Mt MtFuelCoal b 188 191 198Petroleum products 101 108 117Natural gas c 69 89 98Wood and bagasse 21 22 22

ActivityAgriculture 4 4 5Industry d 58 62 67Electricity generation 157 167 176Other energy transformation e 16 22 23Road transport 64 70 76Other domestic transport 10 11 12Commercial f 4 4 5Residential 9 10 10Other g 2 2 2Fugitive h 37 38 39

Total domestic i 361 390 415(of which CO2 is) (325) (354) (378)

International transport j 10 12 13

Total energy i 371 402 428(of which CO2 is) (335) (366) (391)

a Includes CO2 and CH4 on a CO2 equivalent basis. To convert CH4 to CO2 equivalent, a globalwarming potential of 24.5 was used. b Includes coal seam gases. c Includes vented and flared gasesfrom oil and gas production. d Includes construction. e Petroleum refining, coke ovens, briquettingand gas industry own use and losses. f Includes ANZSIC divisions F, G, H, J, K, L,M (see appendixD) and the water, sewerage and drainage industries. g Includes direct emissions from petrochemicalfeedstocks and lubricants, bitumen, solvents and waxes (excluding carbon sequestered in theseproducts). h Includes direct emissions from coal mining and petroleum production (venting, flaringand coal seam gases). i Excludes emissions from wood and bagasse combustion. j Internationalaviation and marine bunker fuels loaded in Australia.Sources: ABARE; National Greenhouse Gas Inventory Committee (1996).

International climate change negotiations under the Berlin Mandate willcontinue throughout 1997 and lead up to the third Conference of the Partiesscheduled for Kyoto, Japan, in December 1997. The Berlin Mandatenegotiations aim to strengthen the commitments of Annex I countries for thepost-2000 period.

Negotiations have not reached international consensus on key issues, suchas targets and timetables, policies and measures and ways to achieve


equitably negotiated outcomes. The implications for Australia thereforeremain uncertain, though the adoption of severe uniform targets of the naturesuggested to date by some countries would result in significant economicand trade losses for Australia. These potential losses are largely a result ofAustralia’s expected continued dependence on emissions intensive fuelsources, particularly in electricity generation and trade. The projected lossesfrom the adoption of uniform targets would be larger in Australia than inmost other countries.

The projections of energy consumption and associated emissions implicitlyincorporate the effects of policies announced through the responses ofcompanies to the fuel and electricity survey. These policies have beenoutlined previously. They include measures contained in the NationalGreenhouse Response Strategy and Greenhouse Challenge, particularly thecooperative agreements program between industry and the government toreduce emissions. It is possible that, at the time the survey was carried out,respondents were not in a position to inform ABARE of consequent actionstaken that may have mitigated or reduced greenhouse emissions. In addition,the projections in this report may eventually require modification as a resultof any new commitments contained in the Berlin Mandate outcome.



Concluding comments

Although the factors which influence energy consumption are many andvaried, the projections contained in this report are more than an academicassessment of these factors. This is because the outlook scenario is basedwhere possible on the assessments of the market participants themselves —namely their announced intentions which incorporate their own expectationsabout future political, technological and economic changes. Of course theirown expectations may be shrouded with some degree of uncertainty,particularly as the planning horizon is relatively long. The major factor islikely to be the largely unknown future of climate change policies.

Another current source of uncertainty which is unlikely to be fully resolvedin the reported intentions of market participants is the full impact of ongoingmicroeconomic reforms in the electricity and natural gas markets to ensurethat trade is more open and competitive and that prices more accuratelyreflect costs of supply.

To the extent that major changes occur to climate change policies, themicroeconomic reform environment and other areas such as internationaltrade and resource access conditions, there will be a need to modify the pro-jections contained in this report. However, because of the long projectionperiod, the reported trends will act as a valuable guide to informed decisionmaking for a substantial period of time.

One of the major features of projected energy consumption in Australia overthe outlook period is the increasing use of natural gas. This reflects theefficiency and competitiveness of natural gas when used in state of the artequipment such as combined cycle power plants, cogeneration facilities andin end use applications such as direct reduced iron technology. Anotherfactor is the expectation that natural gas will become more widely availableat competitive prices as further pipelines are built and more reserves aredeveloped, and because natural gas has environmental advantages over otherfossil fuels.

While switching to natural gas, especially from coal and petroleum products,is expected to continue in Australia, some of the key features of energyconsumption and production are expected to remain fairly constant. For

54

4



example: crude oil is expected to continue to account for the largest shareof total energy consumption; electricity generation is expected to remain thelargest consumer of energy among the sectors; and black coal is expected tocontinue to dominate the pattern of both energy production and trade butwith increased contribution from uranium.



Indicative energy content conversionfactors

The factors listed in tables 22 to 24 should be used when converting individualtypes of fuel from volume or weight to energy equivalence or vice versa. Thevalues are indicative only, because the quality of any fuel varies with suchfactors as location, air pressure and temperature. Values given here apply ata temperature of 15˚C and pressure of 1 atmosphere (101.3 kilopascals). The

56

A


Appendix

22 Energy content of solid fuels

Energy content

GJ/tBlack coalNew South WalesExports – coking coal 29.0

– steaming coal 27.0Electricity generation 23.5Steelworks 30.0Washed steaming coal 27.0Unwashed steaming coal 23.9

QueenslandExports – coking coal 30.0

– steaming coal 27.0Electricity generation 21.4Other 23.0

South Australia 13.5

Western Australia 19.7

Tasmania 22.8

Brown coal (Victoria)Coal 9.7Briquettes 22.1

Coke 27.0Wood (dry) 16.2Bagasse 9.6

Sources: BHP; State Electricity Commission of Victoria;ABARE.



values are the gross energy content of the fuel — that is, the total amount ofheat that will be released by combustion.

The usable energy content of uranium metal (U) is 0.56 PJ/t and that ofuranium oxide (U308) is 0.47 PJ/t. The oxide contains 84.8 per cent of themetal by weight.

23 Energy content of liquid fuels

SpecificBy volume volume By weight

MJ/L L/t GJ/tLPG– propane 25.3 1 960 49.6– butane 27.7 1 750 49.1– mixture 25.7 1 928 49.6– naturally occurring 26.5 1 866 49.4Aviation gasoline 33.1 1 412 46.8Automotive gasoline 34.2 1 360 46.4Power kerosene 37.5 1 230 46.1Aviation turbine fuel 36.8 1 261 46.4Lighting kerosene 36.6 1 270 46.5Heating oil 37.3 1 238 46.2Automotive diesel oil 38.6 1 182 45.6Industrial diesel fuel 39.6 1 135 44.9Fuel oil– low sulphur 39.7 1 110 44.1– high sulphur 40.8 1 050 42.9Refinery fuel (FOE) 40.8 1 050 42.9Naphtha 31.4 1 534 48.1Lubricants and greases 38.8 1 120 43.4Bitumen 44.0 981 42.7Solvents 34.4 1 229 44.0Waxes 38.8 1 180 45.8Crude oil and other refinery feedstocks– indigenous 37.0 1 250 46.3– imports (average) 38.7 1 160 44.9Ethanol 23.4 1 266 29.6Liquefied natural gas (NW Shelf) 25.0 2 174 54.4

Sources: Department of Primary Industries and Energy; Woodside Petroleum Ltd.



24 Energy content of gaseous fuels

Energy content

MJ/m3

Natural gas (sales quality)Victoria 38.8Queensland 38.5South Australia, New South Wales 38.9Western Australia 39.2Northern Territory 40.5

Ethane 57.5

Town gasSynthetic natural gas 39.0Reformed gas 20.0Tempered LPG 25.0Tempered natural gas 25.0

Coke oven gas 18.1

Blast furnace gas 4.0

Sources: Department of Primary Industries and Energy; BHP.


59

B


Comparisons of energy projections

One of the most commonly asked questions about projecting energy demandlong term is how accurate have past projections been when compared withthe actual amount of energy consumed. As the energy consumption andproduction environment is always changing and always will, projections canonly be based on the best available information at the time. However,because of the interest in comparing outcomes with projections, ABAREhas included a brief assessment in this year’s report.

The projections in this report continue a long history of energy projectionswhich have been carried out by various Commonwealth governmentagencies since the early 1970s. Like all forecasts, these energy projectionsare based on a large number of assumptions. These assumptions relate notonly to projected changes in variables such as government policy, economicactivity and energy prices but also the timing of the undertaking ofinvestment projects. However, as can be seen in figure P, projections of

Appendix

Energy projections for AustraliaPP

PJ

1980-81

1985-86

1999-2000

1994-95

1990-91

3000

3500

4000

4500

5000

1981

1983

1985

1987

1989

1991

1993

1995

1997

actual



25 Accuracy of projections of energy consumption

Year of projection

Unit 1981 1983 1985 1987 1989 1991 1993 1995

Mean absoluteerror PJ 234.8 71.3 58.0 63.6 88.3 193.8 48.5 176.7

Mean absolutepercentage error % 6.7 2.0 1.5 1.5 2.2 4.7` 1.1 2.0

aggregate energy consumption using the approach outlined in section 3.1have generally provided acceptable guidelines to future levels of energyconsumption (with the obvious exception of the 1981, where projectionswere to some degree affected by expectations formed during the 1981resources boom).

There are several techniques that can be used to evaluate the performanceof projections through time. To assess the projections the mean absolute errorand the mean absolute percentage error where calculated (table 25). As canbe seen by this analysis the mean error in percentage terms has been under5 per cent with the exception of 1981.


Data sources

Historical data on production and consumption of various fuels are availablefrom a number of sources, but few of these are comprehensive or providemuch detail on the end uses of energy. While these sources are used in thecompilation of data in this report, the main source is the fuel and electricitysurvey conducted every two years by ABARE.

The survey covers more than 3000 organisations controlling more than 5300establishments. It is aimed at all establishments with an annual energyconsumption of one terajoule or more, and is largely confined to the mining,manufacturing, communication, rail transport, electricity generation sectorsand gas production and distribution sectors. [One terajoule (TJ) is 280 000kWh, and is the heat energy content of about 43 tonnes of black coal or29 000 litres of petrol.] In the other sectors of the economy, there tend to bemany more establishments which are on average much smaller consumersof energy than those in the sectors covered by the survey. In the mining andmanufacturing sectors, organisations covered by the survey are estimated toaccount for more than 95 per cent of actual energy use.

The survey provides data on the amount of each type of fuel used by theestablishment, together with details of the type of industrial activity engagedin, the application for which the fuel was used, the type of equipment inwhich it was used and the temperature of the process for which energy isrequired. It thus provides a highly disaggregated source of data for thesectors covered. Data at a comparable level of detail are not available forother sectors.

The survey results are supplemented by a range of other sources. These aredetailed below for each type of energy. Generally, consumption data are notavailable from these other sources, so sales, or in some cases production,have to be used as a proxy for consumption. In most cases the errorintroduced by this practice is small, but for fuels where the market ischaracterised by a small number of very large consumers, such as fuel oil,large variation in stocks renders sales less useful as an estimate ofconsumption. For these fuels, sales have been adjusted by known stockmovements of the major consumers.

61

C


Appendix


Black coal and coke

Black coal consumption is estimated as follows:

• Use for electricity generation is taken from the Electricity SupplyAssociation of Australia’s annual publication Electricity in Australia.

• Use by steelworks is taken as consumption of washed coal in steelworks,as published by the Joint Coal Board (JCB). Coal washery rejects areincluded in JCB salable coal consumption, but are not included here.

• Use by other consumers is taken from JCB and the Queensland CoalBoard (QCB) data.

JCB and QCB data on end use are available at a disaggregated level, andthese are reconciled with data from the fuel and electricity survey. The JCBdata are not available on a strict financial year basis but on the basis of astatistical year, which usually consists of 52 weeks but sometimes includes53 weeks. Data on black coal production and exports are also obtained fromJCB and QCB publications.

Data on production of coke for the years 1960-61 to 1967-68 were obtainedfrom BHP Limited, and for the years 1968-69 to 1972-73 from various issuesof the JCB publication Black Coal in Australia. Data for subsequent yearswere obtained from the fuel and electricity survey.

Brown coal and briquettesData on production and consumption of brown have been obtained from thefuel and electricity survey. Data on production and exports of briquettes upto 1983-84, were obtained from annual reports of the State ElectricityCommission of Victoria. Data on total briquette sales and exports from 1984-85 onwards have been obtained from annual reports of the Coal Corporationof Victoria and more recently Energy Brix Australia Corporation.

WoodData on the use of wood as an industrial fuel are obtained from the fuel andelectricity survey. Use of firewood in households was estimated for 1976 onthe basis of the 1976 Population Census — which included a question onthe prime source of energy used for lighting, heating, cooking and bath water



— and assumed unit consumption rates. Changes in consumption prior to1976 were estimated on the basis of discussions with a number of firewoodmerchants. Changes in consumption since 1976 have been estimated on thebasis of changes in the stock of wood burning equipment, as estimated fromthe ABS 1980, 1983 and 1988 Household Appliance Surveys.

Crude oil and petroleum productsData on production, stocks and sales of crude oil, condensate and refinedpetroleum products are available from industry surveys carried out by theDepartment of Primary Industries and Energy and by ABARE. For mostproducts, ‘sales’ are assumed to be a reasonable proxy for consumption,although for some products changes in stocks are taken into account inestimating consumption.

It is assumed that all sales of automotive gasoline are consumed in roadvehicles. Further, all consumption of fuel in road vehicles is allocated to theroad transport sector, rather than being allocated between personal transportand individual industries. On-road consumption of automotive diesel oil(ADO) and LPG is estimated on the basis of the ABS Survey of Motor VehicleUsage, the figures for years between surveys being interpolated.

Consumption of ADO in mobile equipment in the agriculture, forestry,fishing, hunting and construction sectors is calculated as the residual of totalsales minus known consumption by all other sectors. This residual isallocated between construction and the other industries on the basis ofestimates derived from the ABS Agriculture Census, Australian CustomsService excise rebates for ADO used in agriculture, and estimates of theconstruction vehicle fleet.

About 10 per cent of total refined petroleum production is consumed in non-fuel uses, such as solvents, lubricants, greases, bitumen, waxes, sulphurproduced from crude oil, explosives, aerosol propellants and petrochemicalfeedstocks. To exclude these uses would understate petroleum productconsumption and hence crude oil demand. While these products are includedfor the sake of completeness, for the most part available data do not allowtheir consumption to be allocated to individual industries. The exception ispetrochemical feedstock, consumption of which is assigned to the chemicalindustry. Other non-fuel uses of petroleum products are not assigned toindividual industries, but are accounted for separately.



Data on petroleum product sales are available only for state marketing areas,rather than states. State marketing areas differ from the geographic statesaround border areas. Moreover, marketing areas differ between companies.However, it is generally the case that the state marketing area of New SouthWales includes the whole of the state and the ACT, less the Murwillumbah,Broken Hill–Wilcannia and Riverina districts, which are in the statemarketing areas of Queensland, South Australia and Victoria, respectively;and that the state marketing area of South Australia also includes theMurrayville district of Victoria.

Natural gasData on total production of natural gas are obtained from the Department ofPrimary Industries and Energy. Up to 1988-89, consumption is assumed toequal production. From 1989-90, consumption is taken to be production lessexports. Data on end uses are obtained from the fuel and electricity surveyand from gas utilities. Sales of natural gas in Albury are included in Victorianrather than New South Wales figures.

ElectricityThe electricity generation sector is taken to include not only the generationof electricity by public authorities and the fuel thus consumed, but alsogeneration by privately owned establishments and industry, where data onthe electricity generated and the fuel consumed are available. In some casesit is not possible to identify the quantity of fuel consumed — for example,where steam and electricity are coproduced, or where electricity is producedusing waste heat. In these cases, the electricity generated and the fuelconsumed are allocated to the industry involved.

Electricity data were not collected in the fuel and electricity survey for theyears 1973-74 to 1975-76. Data for this period have been estimated on thebasis of information from a number of sources, the most important being theABS Census of Manufacturing Industry, activity levels of major consumersand, in the case of private electricity, fuels input to electricity generation.

Data on production of hydroelectricity and on public generation of thermalelectricity were obtained from various issues of the Electricity SupplyAssociation of Australia’s publication Electricity in Australia.



Solar energy

Due to data constraints, the measure of solar energy used in this report iscurrently limited to the contribution of domestic and commercial solar hotwater heaters (including those for swimming pools). The total contributionof solar energy is thus understated in a number of ways.

First, active solar collection systems are obviously used more widely thansimply for domestic hot water, commercial hot water and building heatingsystems and swimming pool heating. Solar power for communications isone example of other applications. This solar power is not included becauseof its small contribution to energy provision. It is estimated thatapproximately 13 MW of solar power is installed across Australia, of whichapproximately 4 MW are for telecommunication. Other uses include waterpumps and stand-alone power supply systems. On average this solar powergenerates 2000 kWh/kW a year, giving an annual production ofapproximately 26 GWh (0.094 PJ). Growth in production of electricity fromphotovoltaics is expected to be in the order of 55 MW by the end of theprojection period.

Second, there are passive uses of solar energy, such as salt drying, outsidelaundry drying, passive building heating and crop growing. Apart from thefact that there are no reliable estimates of energy use in these applications,there are conceptual and practical difficulties with measuring passive solarenergy use. Excluding passive applications such as solar salt drying and cropgrowing, and of photovoltaic applications where the substitution is for non-rechargeable batteries, does not affect the supply and demand position forother fuels because of the negligible likelihood of fuel substitution. This is notso in the case of building temperature modification, and only partly true ofapplications such as laundry drying, where there are substitution possibilitiesbetween solar and other forms of energy. In these cases, trends in the use ofsolar power will affect the recorded consumption of other forms of energy.

Use of solar energy for domestic hot water has been estimated on the basisof the estimated number of appliances installed. This information was takenfrom the 1976 Population Census and the ABS 1980, 1983 and 1988Household Appliance Surveys and personal communications with EnergyDivision, Department of Primary Industries and Energy. Energyconsumption is measured as the imputed quantity of electricity replaced bysolar collectors, taking into account the amount of energy consumed in a



typical household hot water system, including heat losses, and the proportionreplaced by a solar collector.

UraniumData on production and exports of uranium up to 1971 were obtained fromthe Australian Atomic Energy Commission’s publication The AustralianUranium Industry. From 1972 to 1981-82, the source of production data isthe ABS publication Mineral Production Australia (cat. no. 8405.0). From1982-83 to 1984-85, production data were sourced from company reports tothe Australian Stock Exchange, and since then the source has been the ABSand ABARE. Data on uranium exports from 1971-72 to 1984-85 wereobtained from the Australian Safeguards Office, and for later years from theABS and ABARE.



Projection models

For those sectors of the economy not included in or not covered adequatelyby the fuel and electricity survey, economic models of varying degrees ofcomplexity are used as the basis for projecting energy consumption. Detailsof these models and of the key assumptions made about the economicvariables used in them are given in this appendix. It should be noted that insome instances the model results were modified for projection purposes.Details of these cases are given in the text.

Agriculture and constructionThe agriculture and construction sectors are relatively minor contributors tototal energy demand, and both are dominated by use of automotive dieseloil (ADO) and electricity. Specific models have not been developed foreither sector. For the construction sector, energy consumption was projectedon the basis of historical energy intensities. In agriculture, diesel use wasprojected to grow by around 1.5 per cent a year, largely as a result ofsubstituting diesel for petrol powered plant. This is a lower growth than hasbeen experienced in the past because of the continuing adoption of minimumtillage techniques and improvements in the fuel efficiency of farmmachinery.

Commercial and servicesThe commercial and services sector (commercial hereafter) comprises thewholesale and retail trade, communications, finance and insurance, propertyand business services, government administration and defence, education,health and community services, cultural and recreation services and personaland other services industries and water, sewerage and drainage.

Responses to the fuel and electricity survey are used for projecting energyconsumption in the water, sewerage and drainage sector. Projections of totalenergy consumption in the commercial sector was based on an estimatedequation of total energy consumption as a function of output and the averageprice of energy over the period 1974-75 to 1994-95. A lagged dependentvariable was also included as an explanatory variable to reflect short runadjustment dynamics.

67

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Appendix


The resulting equation was:

logEt = 0.03 + 0.35Qt – 0.05Pt + 0.73 log Et–1

(6.54) (7.71) (-2.16) (9.35)

R2 = 0.99; adjusted R2 = 0.99; Durbin H statistic = 1.38;t-ratios in parentheses (here and below)

where Et is energy consumption, in petajoules, in the three divisions in yeart, and Qt is real gross domestic product, expressed in millions of 1989-90dollars, in year t. The projections of the price variable Pt are derived from asystem of fuel share equations derived from a translog energy cost function(Australian Gas Association 1996) with the assumption that individual fuelprices grow at the same rate as the consumer price index.

ResidentialProjections of energy consumption per person in the residential sector to theyear 2009-10 are based on an estimated model of quarterly total energydemand for the sector. The estimated equation for the period betweenSeptember 1974 and June 1995 is:

logEt = –0.36 – 0.02 logPt + 0.26 log Yt + 0.41 log Et–1 + 0.06D1

(–19.76)(–0.41) (2.72) (4.69) (2.61)

+ 0.31D2 + 0.46D3

(9.64) (22.46)

R2 = 0.94; adjusted R2 = 0.96; Durbin H statistic = 1.58.

where P is the average unit cost of energy from electricity, gas and otherfuels such as oil and wood; Y is per person real household disposable income;and D1, D2, D3 are the seasonal dummies associated with the March, Juneand September quarters of each year, respectively. The subscript t indicatestime, in quarters.

The average unit cost, P, of energy in the residential sector was measuredas a Divisia price index, with energy cost shares in the residential sectorbeing projected from an extended translog cost model that can incorporatethe effects of technical change, structural change and the tariff pricingstructure as well as the relative prices of fuels. The fuel share equations areestimated and documented in Ho Trieu (1992).



This equation was used to simulate quarterly projections of per person energyconsumption in the residential sector over the period to 2009-10 based onthe assumptions that the relative prices of electricity, gas and other fuelsremain constant. The simulation results from this model were annualised,combined with Australian population projections as shown in table 13.

Aviation turbine fuelConsumption of aviation turbine fuel (avtur) was split between internationaland domestic airline operators. This division is convenient because thefactors affecting consumption in each sector differ, together with theavailability of data on these factors.

International aviation turbine Projections of fuel consumption by international aviation operators (IAC) weresimulated stochastically from a dynamic equation in which fuel consumptionis specified as a function of the number of international passengers (IP). Thisestimated equation over the period 1977-78 to 1995-96 is:

logIACt = –0.13 + 0.28 logIPt + 0.67 logIACt–1

(–0.68) (3.28) (5.94)

R2 = 0.98; adjusted R2 = 0.98; Durbin H statistic = –0.89.

For the projection, the historical growth rate of 7 per cent a year ininternational passenger numbers was assumed over the projection period.The projection for the year 2000-01 was adjusted upwards (by two-thirds ofthe estimated standard deviation of the stochastic forecasts) to account forthe influence of the Olympic Games in September 2000.

Domestic aviation turbineA system of three equations was estimated simultaneously from the data forthe period 1977-78 to 1995-96. In the first equation, the number ofpassenger-kilometres (PKM) is specified as a dynamic function of real grossdomestic product (RGDP), real domestic air fares (RAF) and a dummyvariable to pick up the effect of the pilots’ dispute in 1989-90 (D). The secondequation transformed the predicted passenger-kilometres from the firstequation into seat-kilometres (SKM) using a systemwide load factor (U)which can vary over time. The final equation specified the avtur



consumption of domestic airline operators (DAC) as a dynamic function ofthe number of seat-kilometres (SKM) generated from the second equation.

The resulting equations were:

logPKMt = –0.41 + 1.51 logRGDPt – 0.39 logRAFt – 0.43D + 0.24 logPKMt–1

(–0.96)(10.58) (–5.69) (–11.19) (3.24)

R2 = 0.99; adjusted R2 = 0.98; Durbin H statistic = –0.83.

SKMt = PKMt / Ut

logDACt = –0.70 + 0.49 logSKMt + 0.42 logDACt–1

(–1.53) (5.66) (3.23)

R2 = 0.94; adjusted R2 = 0.94; Durbin H statistic = 1.39.

Projections of domestic airlines’ avtur consumption were simulatedstochastically from this system of equations, with future growth rates of theexplanatory variables being based on the following assumptions:

– real air fares index is projected to decrease from 0.69 in 1995-96 to 0.59by 2010 (BTCE 1995) ;

– the systemwide load factor (Ut) will remain constant at the 1995-96 levelof 0.719 throughout the projection period; and

– the growth rate of real gross domestic product will be as shown in table 13.

The projection for the year 2000-01 was adjusted upwards (by four-fifths ofthe estimated standard deviation of the stochastic forecasts) to account forthe influence of the Sydney 2000 Olympic Games.

Road transportForecasts of the demand for automotive gasoline, ADO, LPG and naturalgas used by the road transport sector were based on a model documented byDonaldson, Gillan and Jones (1990). The model described in that paperfocuses exclusively on the passenger car component of the total vehicle fleet,but similar techniques were used here for the other components, namely rigidand articulated trucks, light commercial vehicles and buses.



Passenger fleet modelThe passenger vehicle fleet accounts for about 66 per cent of total fuel usein the road transport sector and around 98 per cent of automotive gasolineconsumption. The model involves two components, the estimated vehiclestock and the average quantity of fuel consumed per vehicle in a year.

Estimates of the size of the passenger vehicle fleet are based on a logisticfunction of the form:

S = a /( 1 +e–(b+ct))

where S is total registrations per adult, a is the saturation level (at which therate of growth falls to zero), b and c are parameters respectively determiningthe position of the growth curve along the time axis and the rate at whichthe function approaches saturation, and t is time.

The fleet size component of the model is represented as a function ofpopulation growth and time. It is thus assumed that economic factors willnot affect the growth in total stock, although they can be expected todetermine whether people purchase new vehicles and scrap old vehicles, orretain the older vehicles longer.

An initial value of a was assumed on the basis of similar studies in com-parable countries, and then maximised within the constraints of a good fitto the historical data. The vehicle stock component was estimated for theperiod 1950-51 to 1994-95. The estimated parameter values were:

Parameter a b c

Value 0.681 –1.190 0.096

R2 = 1.000; adjusted R2 = 0.999; t-statistic = 183.

In the second component, the average rate of fuel consumption per vehiclea year (AFC) was modelled directly as a function of income and fuel prices.For simplicity the price of automotive gasoline was used rather than aweighted average of all fuel types. The equation used was:

logAFCt = 8.94 – 0.1 logPt – 0.21 logGDPt – 0.02D1 + 0.02D2

(23.8) (–10.2) (–12.4) (–4.5) (+3.4)

R2 = 0.97; adjusted R2 = 0.93; Durbin–Watson statistic = 1.24.



where Pt is an index of real automotive gasoline prices in year t, GDP is anindex of real gross domestic product in year t, D1 is a dummy variable totake account of the effect of the oil price shock in the final years of the 1970sand early 1980s, and D2 is a dummy variable for the period 1986-87 whendemand contracted despite falling real prices. The equation was modelledover the period 1970-71 to 1994-95.

In the projection, AFC was multiplied by the car stock to form an estimateof aggregate fuel used by cars and station wagons. This aggregate fuel figurewas then divided into petrol, ADO, LPG and natural gas on the basis of theactual and expected market penetration of these fuel groups. Automotivepetrol demand was further split between leaded and unleaded fuels, basedon the exclusive use of unleaded fuel in new petrol powered vehicles, whichfor passenger cars and station wagons commenced on 1 January 1986. Thesplit was obtained by applying a cumulative distribution function to thepetrol fleet based on the relative ages of vehicles and the 1986 deadline.

Commercial fleet modelFuel consumption for the commercial vehicle fleets (rigid and articulatedtrucks, light commercial vehicles, and buses) was estimated on the basis ofaverage fuel consumption per unit distance, and vehicle kilometres travelledin a year. The key components of total fuel consumption for the majorcommercial vehicle types are shown in table 26.

The fuel consumption of each subfleet was divided among automotivegasoline, ADO, LPG and natural gas on the basis of their expected pricesand availability and estimates of the future market penetration of natural gas.The increased use of natural gas will affect all fleets in the commercial sector,with the greatest penetration expected in diesel buses.




26 Components of commercial vehicle fuel consumption

Year Vehicle kilometres Average fuel consumption

million km L/100 km

Rigid trucks 1994-95 6725 27.01999-2000 8150 26.6

2004-05 9640 25.92009-10 11250 25.3

Articulated trucks 1994-95 5094 50.61999-2000 6080 49.8

2004-05 7190 48.62009-10 8390 47.4

Light commercials 1994-95 27751 13.21999-2000 33430 13.0

2004-05 39550 12.72009-10 46150 12.4

Buses and other 1994-95 1728 27.71999-2000 2080 27.2

2004-05 2460 26.62009-10 2870 25.9


Australian and New Zealand StandardIndustrial Classification

In general, the industrial classification and sectoral definitions used in thispublication correspond to the 1993 Australian and New Zealand StandardIndustrial Classification (ANZSIC). Full details of the classification aregiven in Australian Bureau of Statistics, ANZSIC: Australian and NewZealand Standard Industrial Classification (1993 edition), vol. 1, Canberra.

ANZSIC has been slightly modified for the purposes of this publication togive the classification shown in table 27. The changes are:

• the separation of electricity generation into two categories — public andprivate;

• the addition of a ‘residential’ category (ANZSIC has no provision for theclassification of private households consuming fuels, as it is designed toclassify productive activities);

• the addition of a category for consumption of certain non-fuel products— solvents, lubricants and bitumen — rather than allocating them toANZSIC categories.

ANZSIC does not separately list the classification of public lighting, butadvice from the Australian Bureau of Statistics was that this activity shouldbe included in the government administration and defence sector.

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Appendix



27 Industrial classifications used in the study

Sub-Division division Group Title

A Agriculture, forestryand fishing

01 Agriculture02 Services to agriculture03 Forestry and logging04 Commercial fishing

B Mining11 Coal mining12 Oil and gas extraction13 Metal ore mining14 Other mining15 Services to mining

C Manufacturing21 Food, beverages and tobacco

211 Meat and meat products212 Dairy products213 Fruit and vegetable processing214 Oil and fat products215 Flour mill and cereal food

products216 Bakery products217 Other food products218 Beverages and malt219 Tobacco products

22 Textile, clothing, footwear and leather

23 Wood and paper products24 Printing, publishing and

recorded media25 Petroleum, coal, chemical

and associated products251 Petroleum refining252 Petroleum and coal products nec253 Basic chemical products254 Other chemical products255 Rubber products256 Plastic products

26 Non-metallic mineral products261 Glass and glass products262 Ceramic products263 Cement, lime, plaster and

concrete products264 Non-metallic mineral products

27 Metal products271 Iron and steel272 Basic non-ferrous metals

Continued


27 Continued

Sub-Division division Group Title

273 Non-ferrous metal basic products

274 Structural metal products275 Sheet metal products276 Fabricated metal products

28 Machinery and equipment29 Other manufacturing

D Electricity, gas and water36 Electricity and gas

361 Electricity3611 public electricity3612 private electricity362 Gas

37 Water, sewerage and drainage

E Construction

F Wholesale trade

G Retail trade

H Accommodation, cafes and restaurants

I Transport and storage61 Road transport62 Railway transport63 Water transport64 Air transport65 Other transport66 Services to transport67 Storage

J Communication

K Finance and insurance

L Property and business services

M Government administration and defence

N Education

O Health and community services86 Health87 Community services

P Cultural and recreational services

Q Personal and other services

R Non-classified economic units

Residential

Solvents, lubricants and bitumen

Source: Modified from Australian Bureau of Statistics and New Zealand Department of Statistics,Australian and New Zealand Standard Industrial Classification (1993 edition).



Indicative carbon dioxide contentconversion factors

Carbon dioxide emissions from the combustion of fuels are calculated byconverting activity data (gross energy consumption) by an ‘emission’ and‘oxidation’ factor. Carbon dioxide emission factors from different fuel typeshave been calculated on the basis of specific characteristics of Australianenergy sources (table 28).

The oxidation factor represents the proportion of carbon oxidised duringcombustion.

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F


28 Carbon content and carbon dioxide emission factors

Carbon Energycontent content Carbon coefficients a

Gg cont. PJ / Mt Gg cont. Gg CO2

carbon/Gg = PJ/ ’000 Gg carbon/PJ /PJ

Washed steaming coal 0.67 27.0 24.8 90.0Brown coal 0.25 9.7 26.2 95.0Wood 0.42 16.2 25.9 94.0Bagasse 0.26 9.6 26.7 96.8Fuel oil 0.89 44.1 20.2 73.3Naphtha 0.87 48.1 18.2 66.0ADO 0.88 45.6 19.2 69.7IDF 0.87 44.9 19.3 70.2Power kerosene 0.89 46.1 19.2 69.7Lighting kerosene 0.89 46.5 19.2 69.7LPG 0.81 49.6 16.4 59.4Automotive gasoline 0.84 46.4 18.2 66.0Aviation gasoline 0.88 46.8 18.7 68.0Aviation turbine fuel 0.87 46.4 18.7 67.8Heating oil 0.89 46.2 19.2 69.7Other petroleum na na 18.9 68.6

Natural gas 0.76 na 14.0 51.3Methane 0.75 na 14.0 51.3

a The percentage of fuel oxidised is 99 per cent except for natural gas which is 100 per cent. na Notavailable.

Appendix


References

Australian Bureau of Statistics 1995, Survey of Motor Vehicle Use, Australia,Preliminary, cat. no. 9202.0, Canberra, September.

—— (ABS) 1996, Projections of the Populations of Australia States andTerritories 1995 to 2051, cat. no. 3222.0, Canberra.

Australian Gas Association 1996, Price Elasticities of Australian EnergyDemand, AGA Research Report no. 3, Canberra.

BTCE (Bureau of Transport and Communications Economics) 1995,Greenhouse Gas Emissions from Australian Transport: Long TermProjections, Report 88, AGPS, Canberra.

Bureau of Resource Sciences 1996, Oil and Gas Resources of Australia 1995(revised estimates), Canberra.

Bush, S., Holmes, L. and Ho Trieu, L. 1995, Australian Energy Consumptionand Production: Historical Trends and Projections to 2009-10, ABAREResearch Report 95.1, Canberra.

Commonwealth of Australia 1992, National Greenhouse Response Strategy,AGPS, Canberra.

—— 1994, Climate Change: Australia’s National Report under the UnitedNations Framework Convention on Climate Change, Canberra, September.

—— 1996, Sustainable Energy Policy for Australia, Green Policy Paper,Canberra.

Donaldson, P.K. 1997, ‘Oil and natural gas – producing for export markets’,in Outlook 97, Proceedings of the National Agricultural and ResourcesOutlook Conference, Canberra, 4–6 February, vol. 3, Minerals andEnergy, ABARE, Canberra.

Donaldson, P.K., Gillan, P. and Jones, B.P. 1990, Road transport fuel demandin Australia: projections vehicle fuel use, ABARE paper presented at theConference of Economists, Economic Society of Australia, Sydney,February.



Fisher, B.S., Penm, J. and Woffenden, K. 1997, ‘Commodity overview’, inOutlook 97, Proceedings of the National Agricultural and ResourcesOutlook Conference, Canberra, 4–6 February, vol. 1, Commodity Marketsand Natural Resources, ABARE, Canberra.

Graham, P., Middleton, S. and Hogan, L. 1997, ‘Outlook for coal’, inOutlook 97, Proceedings of the National Agricultural and ResourcesOutlook Conference, Canberra, 4–6 February, vol. 3, Minerals andEnergy, ABARE, Canberra.

Ho Trieu, L. 1992, Modelling the demand for energy in the residential sectorin Australia, ABARE paper presented at the 21st Annual Conference ofEconomists, Economic Society of Australia, Melbourne, 8–10 July.

Hogan, L., Thorpe, S., Zheng, S., Ho Trieu, L., Fok G. and Donaldson, K.1996, Net Economic Benefits from Australia’s Oil and Gas Resources,ABARE Research Report 96.4, Canberra.

International Energy Agency (IEA) 1996, World Energy Outlook,OECD, Paris.

Melanie, J. and Weston, L. 1995, ‘Electricity generation structural andregulatory reform in Australia’, Australian Commodities, vol. 2, no. 3, pp.358–72.

National Greenhouse Gas Inventory Committee 1996, National GreenhouseGas Inventory, 1988 to 1994, Department of the Environment, Sport andTerritories, Canberra.

Stevens, M. 1994, Renewable energy options in Australia and New Zealandfor the next 25 years – the technologies and the feasibilities, Paperpresented at the Greenhouse 94 Conference, Wellington, New Zealand,October.

Weston, L. and Melanie, J. 1996, ‘Electricity and natural gas – implicationsof energy market reforms for interfuel competition’, Australian Commod-ities, vol. 3, no. 3, pp. 372–83.

Wilson, B., Ho Trieu, L. and Bowen, B. 1993, Energy Efficiency Trends inAustralia, ABARE Research Report 93.11, Canberra.



Statistical tables

Data are presented in these tables in two ways: energy units (joules) andunits of material quantity (most commonly litres or tonnes). The use ofenergy units enables comparisons to be made between the relativecontributions of different fuels to meeting total energy consumption, or theirshare of total supply. Energy units must also be used to determine totalenergy production or consumption, as litres of oil and tonnes of coal cannotbe added. Energy commodities are most commonly marketed and measuredin terms of material quantities, rather than energy units, so data presented inmaterial units are often more meaningful to those concerned with individualcommodities.

Some forms of energy are used to produce other forms of energy which arethen finally consumed. For this reason some entries are negative and in sometables it may not be obvious how totals are derived. This is particularly thecase with the A, C and D tables.

The energy balances shown in tables A1 to A18 summarise the overallenergy situation in Australia.

The first section of an energy balance presents the ‘Total domestic avail-ability’ of energy for domestic use. This is equal to indigenous productionof primary fuels, plus imports of primary and derived fuels, less exports, lessnet changes in stocks. This supply of energy, which is mainly in the form ofprimary fuels, is equal to total energy consumption.

The second section of the energy balance describes the energy flowsinvolved in converting primary fuels to derived fuels. Inputs to theconversion process are shown as positive, and outputs (the derived fuelproduced) as negative. For example, the row relating to petroleum refiningshows input of crude oil feedstock, fuels such as natural gas and electricityused to provide energy for refinery processes, and an output of petroleumproducts. The total for this row shows the amount of non-oil fuels (naturalgas and electricity) consumed in the conversion process. The quantity ofpetroleum products consumed as refinery fuel is shown separately in the‘Fuel use in conversion’ row.



The net amount of each fuel available for final use, shown in the ‘Finaldomestic availability’ row, is equal to ‘Total domestic availability’ less netlosses resulting from conversion processes. For some fuels, such as coal, thissupply available for final use is much less than total supply; most of the coalis either converted into other fuels, such as electricity, briquettes and coke,or is used as an energy source (with some loss) for the conversion process.

The final section shows the way in which the supply of energy available forfinal consumption is used by broad end use sectors.

The C1 table provides a detailed picture of energy flows in Australia. Thedata show fuels consumed, derived fuels produced and total consumption(the difference between the two), by industry and fuel type. Energyconsumption in an individual industry is the energy content of its primaryand derived fuel inputs (fuels consumed) minus the energy content of anyfuels it produces, by conversion processes (derived fuels produced); that is,energy input minus energy output. Derived fuels produced may be eitherconsumed by that industry or transferred to other industries. Table C2 showsthe input of fuels, by equipment type. The measure of energy consumptionin this table differs from the measures of it above in that it is equal to thetotal input of energy, and does not net out any derived energy outputs (suchas electricity produced from black coal). The inputs in this table thereforecannot be totalled without double counting.



ENERGYStatistical tables



Energy projections to 2009-10 85






















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